THE CONSEQUENCES OF TARIFFS AND QUOTAS

Trade, without doubt, has  the most  important role in human life.Trade, or commerce, involves the transfer of goods or services from one person or entity to another, often in exchange for money. All  people trade regularly. Although it caused wars and people died in the past, it now continues its importance with different results.  Trade protectionism, which is a kind of virtual commercial war, is the economic practice of restricting trade between countries, usually through imposing tariffs or setting quotas on imported goods. It can also involve subsidizing domestic industries. Nowadays, governments are applying tariffs and quotas to protect their countries. Even though there are several effects of  tariffs and quotas, welfare and retaliation are claimed to be the most important two.

To begin with, welfare is known to be the primary effect of tariffs and quotas.It is not a coincidence that most societies want to live at a high level of prosperity(enjoy a high level of prosperity), even if they are rich, hence the governments of these  societies are occupied in increasing (in the increase of) their people's trading power.The first rule of wealth or welfare for a country is that local products are cheaper than imported products. To exemplify, the domestic producer should be relatively more competitive compared to importers. Thanks to tariffs, the small manufacturer can make   more profit than international companies. Another point is that if a country does not have enough products and producers(have either enough products or enough producers) ,increasing tariffs will reflect on consumer labels. Eventually, purchasing power will be reduced. In short, tariffs must be balanced for both consumers and producers by governments.

Furthermore, retaliation seems to be the second effect of tariffs and quotas. Countries may also set tariffs as a retaliation technique, if they think that a trading partner has not played by the rules. For instance, when the US does not agree with its ally Turkey in the Middle East, it puts extra customs duty on iron and steel products On the other hand, thanks to tariffs and quotas, the countries can produce their business opportunities for their citizens. The more business opportunities you have, the fewer  problems of revenue you have. Briefly, tariffs and quatas  always offer the possibility of retaliation

All in all, welfare and retaliation are said to be the most common effects of tariffs and quotas. International trade is connected with consumer demands and supply. I think the most sensible economic model for a country is to use tariffs and quotas, which are considered to be international economic weapons after they have achieved their domestic trade balance.

BURAK ÖZÇİFÇi