Pros and Cons of Tariffs Essay Example | Topics and Well Written Essays - 1750 words

Pros and Cons of Tariffs - Essay Example The essay "Pros and Cons of Tariffs" analyzes what we need the taxes for, their functions, their advantages, and disadvantages. Tariffs are known as custom, import duties, or import fees are generally barriers to trade that protect the locally produced goods and promoting domestic industries. One of the basic components of tariff system is tariff classification. National tariffs are organized in such a manner that they consist of tariff classification numbers that are assigned to goods and corresponding tariff rates. The other component of tariffs is a valuation of goods for tariff purposes. The effects of import tariffs cannot be under estimated for it raises domestic prices in the country imposing the tariff. In countries that do not have an influence on the international prices, the amount of the tariff however in countries that have an impact on the international prices, the prices are less than a number of tariffs due to the fact that part of the tariff is reflected in a reduction in international prices. Placing a tariff on an imported good has a number of outcomes, which are quite advantageous to the home country. Use of tariffs can come in time when the government would like to protect local infant industries against stiff competition. Many developing nations employ the Import Substitution Industrialization strategy. The government may even levy tariffs of goods in industries they would like to invest in the country. This will provide local industries an advantage of production of cheap goods.