Tariffs and Free Trade

Document Type:Coursework

Subject Area:Economics

Document 1

There several impacts of tariffs as explained below; They reduce the volume of imports in the country since their demand decreases due to increased price as a result of the tax. As a result of decrease in their demand it implies that locally manufactured goods will increase their demand thus rise of local industries. Tariffs also contribute to loss of markets of locally produced products in the outside the country market since other states will likely to retaliate by imposing the taxes as well. This implies that tariffs tend to cripple the economy since it acts as barriers to free trade. The only advantage is that they protect local industries which in return increase employment opportunities in the country (Findlay & Wellisz, 2012.

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