Question

Use your knowledge about trade policy to evaluate each of the following statements:

b. “High tariffs and quotas can result in trade wars between nations.”

Answer 1

Tariffs are the taxes imposed by importing nations in order to discourage the usage so that the consumers use domestic goods and help domestic producers

Quotas are the quantity limitations set by importing nations, so that domestic suppliers would supply the remaining quantity demand

So, when a nation uses tariffs and Quotas, other nations also use the same tool to protect the domestic business which eventually would lead to higher prices for consumers