Premium Essay

Tariff

In: Business and Management

Submitted By yewallace
Words 2819
Pages 12
Introduction

A car tariff is a fee which is imposed on imported vehicles. The tariff can be assessed in a number of ways, depending on the policies of the nation instituting the tariff, and it is usually based on a percentage of the declared value of the vehicles. Tariff rates for cars, trucks, and other types of vehicles are usually different, with a schedule being established and periodically reevaluated to determine whether or not the car tariff is appropriate in the current market.
Like other types of tariffs, a car tariff is designed to promote the welfare of domestic industries. The car industry may not be able to compete with cheaper imports, but once tariffs are assessed, they level the playing field slightly, giving domestic cars an edge in the marketplace. Car tariffs can also sometimes be used to penalize car importers who bring in inefficient products, with the car tariff being reduced for vehicles with low emissions or high fuel efficiency.
Importers often criticize car tariffs because they add to the cost of doing business, and some argue that consumers have their freedom of choice restricted by tariffs. Some nations have responded to such criticism by abolishing or lowering their car tariffs to make the business climate friendlier to importers, while others have upheld high tariffs, arguing that their domestic automobile industries need the protection provided by tariffs.

Cars from foreign manufacturers can be less expensive for a variety of reasons, including more lax labor laws in some nations, cheaper raw materials, or government subsidies to car manufacturers which allow them to sell their goods at low cost. Some advocates of free trade have suggested that eliminating tariffs allows the market to balance itself out, and that a lack of tariffs would encourage the failure of businesses which are not running effectively, while promoting

Similar Documents

Premium Essay

The Impact of Tariff and Non-Tariff Barriers International Trade

...ECFI 644 International Economics Instructor: Dosse Toulaboe By Zhenjie Song (Leo) The Impact of Tariff and Non-Tariff Barriers International Trade Introduction In nowadays, tariff and non-tariff barriers have affected the trends and structure of international trade, the geographic direction, and importing and exporting countries relations (Stigler, 1971). This research paper mainly will talk about the tariff, non-tariff, and the relationship and impact of them. Tariff A tariff is simply a tax or duty placed on an imported good by a domestic government. Tariffs are usually levied as a percentage of the declared value of the good, similar to a sales tax. Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. Tariff could be an old and popular method of obtaining revenue from international business and economic activities. Generally, government levy tariffs for three main reasons. The first is that the tariff can protect fledgling domestic industries from foreign competition; the second is that the tariff can protect aging and inefficient domestic industries from foreign competition; the last reason is that the tariff can protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price...

Words: 2364 - Pages: 10

Free Essay

Chinese Tire Tariff

...ECON 2010 11 November 2012 Chinese tire tariff lifted September 2009 marked the beginning of a major tariff on imported Chinese tires created by President Obama in an effort to curtail imports considered to possibly be a detriment to U.S. workers. This motion was brought to the table by a complaint filed to the Federal Trade Commission by the United Steelworkers union citing unfair trade practices by China1. The belief was that cheap, imported Chinese tires were the root cause of the loss of over a thousand U.S. jobs in tire manufacturing. Many believe that the tariff was political posturing from Obama aimed at the ever critical Ohio automotive unions. Politics aside, the economic impact over the last 3 years has been great, or not so great, depending on which side of the fence you are standing. Import tariffs by design are used to help control trade balances with foreign countries in an effort to create a somewhat level playing field for all firms within an industry. The Chinese tire tariff has arguably been an irrelevant political attempt to bolster the support of union labor in Ohio. Beginning as early as 2000 the United States had approximately 87,000 workers domestically in tire manufacturing with that number shrinking each year down to 55,000 in 20093. As with much of domestic manufacturing, tire companies began to look to foreign countries to produce their products due to lower costs and higher volume capabilities. With approximately 46.5 million imported...

Words: 881 - Pages: 4

Premium Essay

Tariffs and Non-Tariff Barriers to Trade

...International Marketing 4530 15 September 2015 Tariffs and Non-Tariff Barriers to Trade When considering trade on a global scale, one must consider certain trade restrictions imposed on imported goods, or tariffs. Global trade has many benefits such as supplying consumers with a wide assortment of goods, allowing domestic firms to trade internationally, and cutting costs of goods. However, not everyone completely benefits from global trade due to tariff and non-tariff barriers. Monetary restrictions to trade come in the form of tariffs, or a tax on imported goods; non-monetary restrictions on trade are called non-tariff barriers. Tariffs have been used by governments throughout history to control the flow of trade and determine which countries are best to engage in trade. These tools use are used by countries for several different reasons to protect the nation’s economy. Tariffs can be put into place by a nation’s government for virtually any reason seeming fit; however, there are a few main reasons that are reoccurring. A main reason for tariffs is to protect newly established, infant industries from being overpowered by foreign competitors. A high tariff on the importing of a certain goods that are also being domestically produced will decrease foreign competition in that market. Another main reason some governments levy a tariff is to protect the workforce in that country. Some argue that unemployment will rise when cheap, foreign goods are imported to replace domestically...

Words: 887 - Pages: 4

Premium Essay

Tariff and Non Tariff

...Tariff barriers Tariffs, which are taxes on imports of commodities into a country or region, are among the oldest forms of government intervention in economic activity. They are implemented for two clear economic purposes. First, they provide revenue for the government. Second, they improve economic returns to firms and suppliers of resources to domestic industry that face competition from foreign imports. Tariffs are widely used to protect domestic producers’ incomes from foreign competition. This protection comes at an economic cost to domestic consumers who pay higher prices for import competing goods, and to the economy as a whole through the inefficient allocation of resources to the import competing domestic industry. Therefore, since 1948, when average tariffs on manufactured goods exceeded 30 percent in most developed economies, those economies have sought to reduce tariffs on manufactured goods through several rounds of negotiations under the General Agreement on Tariffs Trade (GATT). Only in the most recent Uruguay Or Simply Import duties or taxes imposed on goods entering the customs territory of a nation. Imposes for revenue collection, protection of domestic industry, political control. Non Tariff Barriers Nontariff barriers (NTBs) refer to the wide range of policy interventions other than border tariffs that affect trade of goods, services, and factors of production. Most taxonomies of NTBs include market-specific trade and domestic policies affecting...

Words: 709 - Pages: 3

Free Essay

Port Pricing & Port Tariff Analysis

...Port Pricing & Port Tariff Analysis THE PORT PRODUCT A chain of consecutive links, while the port as a whole may itself be seen as a link in a global logistics chain Port costs account for only a fraction of the total costs associated with the logistics chain The prototypical port does not exist. Ports inevitably have an heterogeneous quality, e.g. the large number of possible market players involved (government, port management, shippers, forwarders, agents, shipping companies, trade unions, etc), each of which has specific objectives. Generalized Port Price Port Price per unit of throughput represents prices charged by the port for various port services, e.g. wharfage, berthing and cargo handling charges Ocean Carrier Port Time Price per unit of throughput represents the time-related costs incurred by ocean carriers while their ships are in port, e.g. ship depreciation, fuel and labor costs Inland Carrier Port Time Price per unit of throughput represents the time-related costs incurred by inland (rail and truck) carriers while their vehicles are in port, e.g., vehicle depreciation, fuel and labor costs Shipper Port Time Price per unit of throughput represents the time-related costs incurred by shippers while their shipments are in port, e.g., inventory costs such as insurance and depreciation costs. Port Profit Profit = Port Price*Port Throughput – Minimum Port Costs Port operating objectives of the port operator will differ depending...

Words: 1877 - Pages: 8

Premium Essay

The Protectionism Effect: Tariffs, Quotas, and Subsidies

...Effect: Tariffs, Quotas, and Subsidies The most common way to protect one’s economy from import competition is to implement a tariff: a tax on imports. Generally speaking, a tariff is any tax or fee collected by a government. Sometimes the term “tariff” is used in a nontrade context, as in railroad tariffs. However, the term is much more commonly used to refer to a tax on imported goods. Tariffs have been applied by countries for centuries and have been one of the most common methods used to collect revenue for governments. This is because it is relatively simple to place customs officials at the border of a country and collect a fee on goods that enter. Administratively, a tariff is probably one of the easiest taxes to collect. (Of course, high tariffs may induce smuggling of goods through nontraditional entry points, but we will ignore that problem here.) Tariffs are worth defining early in an international trade course since changes in tariffs represent the primary way in which countries either liberalize trade or protect their economies. It isn’t the only way, though, since countries also implement quotas, subsidies, and other types of regulations that can affect trade flows between countries. These other methods will be defined and discussed later, but for now it suffices to understand tariffs since they still represent the basic policy affecting international trade patterns. When people talk about trade liberalization, they generally mean reducing the tariffs on imported...

Words: 3232 - Pages: 13

Premium Essay

Us Steel Tariff

...protection from imports leading President George W. Bush to put in place steel import tariffs under Section 201 of the 1974 Free Trade Act by March of 2002 (Robertson 2002). These protectionist measures imposed an average 30 percent tariff on selected foreign steel entering the United States. During negotiations, The International Trade Commission (ITC) recommended imposing a 40 percent commission while some extremists proposed 80 percent (Ho 2003). Although steelmakers were content with the implementation of the tariff as it provided some relief from imports, critics argued against the effects it would have on steel consuming businesses (Carbaugh 2011). The American Institute for International Steel (AIIS) felt that this tariff did not support free trade. The AIIS also believed that the steel tariff did not force companies to work in a price-competitive environment. David Phelps, president of the AIIS, believed in survival of the fittest. Phelps said that without protections such as these, strong companies would survive and weaker players would be eliminated (Robertson, 2002). With the key arguments from the U.S. auto makers, tariffs from some steel were revoked as it would have had more of a negative impact on the end consumer and other companies (Carbaugh 2011). 2 Literature and methods applied to discuss and solve the problem indicated in the case In 2002, President Bush imposed tariffs on imported steel to protect such national industry, contending that it could facilitate...

Words: 1981 - Pages: 8

Premium Essay

U.S. Imposition of Steep Tariffs on Chinese Solar Panels – Protecting or Hurting American Markets and Consumers?

...U.S. Imposition of Steep Tariffs on Chinese Solar Panels – Protecting or Hurting American Markets and Consumers? On Tuesday, December 16th 2014 the United States Department of Commerce approved a collection of trade tariffs on solar panels imported from China and Taiwan. Tariffs on these solar panels, ranging from 18.56% to 35.21%, have been in place since earlier this year when the Commerce Department issues a preliminary decision. The case was brought by SolarWorld Industries America, Inc. the U.S. subsidiary of German company SolarWorld AG. SolarWorld alleged that Chinese companies were selling solar panels in the U.S. market below manufacturing cost, a practice known as “dumping”, with the intent being to cause harm to domestic manufactures of similar products. This particular case dates back to 2012 when SolarWorld first successfully petitioned to impose solar panel import tariffs. Chinese manufactures of solar panels then started using solar cells, the central component of the technology used to harvest the sun’s energy and convert it into electricity, made in Taiwan as a means to circumvent the restrictions. This led SolarWorld to again ask the Department of Commerce to expand the tariffs to include Taiwanese manufactured panels. The proposal will next go to the U.S. International Trade Commission for review, and if approved, keep the assessed duties in place for at least five years. A SolarWorld spokesperson has declared this action as a major victory...

Words: 913 - Pages: 4

Premium Essay

Tariff and Non-Tariff

...A Tariff can be generalized as a comprehensive tax on goods that are imported from foreign countries. The goal of a tariff is to secure the domestic product of a given nation from cheaper goods which are imported from nations that have a larger producing capacity. Tariff also helps to balance the prices in a country. Issues that may arise from tariff can be double sided. In other words, tariff has the power to bring businesses and governments down to instant financial security (Wikipedia, 2007). There are many different tariffs in which each is designed for a specific operation. The most notable tariffs are the protective tariff, the revenue tariff, and the prohibitive tariff. The protective tariff was enacted to inflate the prices set by imported products which create a positive vacuum for domestically based industries. This type of tariff places high tax on foreign imports which in turn forces a given company to raise its prices above its competitors who are based domestically. The revenue tariff is designed to generate and accumulate large amount of finances for the government. An example of such tariff would be a country that has very little product. In order to keep the domestic gains strong the government will need to install tariff on the imported goods which will levy the prices. This act by the government creates a security blanket for the limited product of certain import goods. The prohibitive tariff is the worst tariff to use in a global market today. This type...

Words: 1032 - Pages: 5

Premium Essay

Tariff

...Why is it important for each student to have a laptop? Just as it is not feasible to have students stand in line to share learning tools such as a pencil, paper, notebook, book, etc, it also doesn’t make sense for them to share a laptops.  Students often need to work at their own pace in their own way.  Laptops become a student’s assistant for thinking, drawing, writing, reading, analyzing, calculating, connecting, collaborating, producing, researching, presenting, and more.  This does not occur if they are given only isolated pockets of time or have to wait until someone else is done. Their laptops provide anytime/anywhere on-demand access to information, thinking, learning, experts, collaboration, creativity and knowledge and more.  As one student put it clearly, "When I can't use my laptop, I feel like a part of my brain is missing." Today's collaboration does not occur with two students sitting at one laptop.  It occurs with students using their own learning stations collaborating and connecting with like-minded people, inputing, discussing, interacting, simultaneously not one at a time.  Furthermore, those people they are interacting with are not just the student next to them, but could be a student, adult, or expert any where in the world. To be truly effective laptops must be woven into everything that is done in the classroom.  Jean Piaget protégé and artificial intelligence pioneer Seymour Papert explains it this way, "People around the world have opted to use the...

Words: 1194 - Pages: 5

Premium Essay

International Trade Policy - Tariff in Korean

...nterII. 무역정책 1. 무역정책의 수단 무역정책: 국가간의 재화와 서비스의 흐름에 직접적인 영향을 미칠 목적으로 도입되는 정책 산업정책: 소비, 생산, 고용의 산업간 배분에 영향을 미칠 목적으로 도입되는 정책. 하지만 간접적으로 무역의 흐름에 영향을 미치게 된다., 2. 무역정책의 수단 1. 수입경쟁시장의 보호수단 가격규제 관세(tariff): 가장 투명하고, 왜곡이 적은 보호수단 종량세(specific tariff), 종가세(ad valorem tariff) 최소가격 제한 반덤핑 법, 가격지지 협정 등 물량적 규제 수입쿼터(import quota) 수입면허(import license) 쿼터 부과로 수입품의 공급이 축소하고, 수입품의 가격이 상승하면 수입을 할 권한 을 가진 사람의 소득은 증가하게 된다. 이를 쿼터 지대라고 부른다. 관세는 이러 한 지대를 정부에 귀속시키지만 물량적 규제는 그 방법에 따라 지대의 일부, 혹은 전부를 외국의 공급자에게 귀속시킬 수 있다. 이러한 면에서 수입억제효과가 동일 또한 물량 할 경우에도 물량적 규제는 관세보다 많은 후생손실을 초래하게 된다. 적 규제는 국내 공급자의 시장지배력을 증가 시키거나 외국 공급업자와의 담합을 초래함으로써 소비자에게 관세보다 더 큰 피해를 주기 쉽다. 또 수출국의 기술진 보가 있거나 국내 수입시장이 확대될 경우 관세 하에서는 수입량이 자동적으로 증 가하지만 물량적 규제 하에서는 이것이 불가능하다. 왜곡시키지만 물량적 규제는 이를 마비시킨다. 즉 관세는 비교우위의 작동을 이에 더하여 쿼터는 수출국간 차별 을 가져오기 쉬우며, 행정절차와 감독이 매우 복잡하고, 로비와 부패를 유발한다. GATT 명시적으로 수입쿼터를 제한하고 있으나, 많은 예외 인정 외환규제(exchange control) IMF 8 조 규제사항 국산화비율 규제(local content requirement) 국산화 비율이 일정 수준에 미달하면 수입품으로 간주 판매금지 혹은 높은 관 세 부과 참고: 스크린 쿼터 자율적 수출규제(VER, voluntary export restraint) 협정을 거부할 경우 명시적인 보호정책을 취할지 모른다는 위협을 배경으로 수 출국이 수출량을 동결하거나 축소하겠다는 협정을 맺도록 외교적으로 유도. 쿼터와 같은 효과를 가지면서 지대를 전부 외국 기업에게 귀속시킴으로 가장 비효율적인 수입규제 수단으로 평가. 1 2. 수출시장의 보호 수출보조금 내수가격을 증가 시켜 소비자에게 피해를 주며 외국시장 공급가격 을 하락 시켜 교역조건을 악화시킨다. 대부분의 경우 이러한 피해가 수출업자 의 이익을 상회함으로 경제학은 이를 자국의 후생을 자발적으로 감소시키는 우 매한 행위로 간주한다. GATT 규제사항. 자율적 수입확대(VIE, voluntary import expansion) 협정을 거부할 경우 보복정책을 취할 것이라는 위협을 배경으로 수입국이 수입량 을 확대할 것이라는 협정에 조인하도록 유도 ...

Words: 5683 - Pages: 23

Premium Essay

Us Tariff on Chinese Tariffs

...•  What are tariffs? Ø A tariff is a tax or duty to be paid on a particular class of imports or exports. •  China’s trade game •  Background of the US tire industry Introduction •  20th April 2009 Ø American labor unions signed and filed a petition to the International Trade Commission requesting an investigation on the Chinese tire imports •  Results from the investigation •  18th June 2009 Ø ITC and president Obama agreed on 3 years of years of duties on Chinese tires: q 35% in the first year q 30% in the second year q 25% in the thirds year Summary of the case: U.S. Actions •  China’s appeal against U.S. tire tariffs •  Tariffs imposed by China on U.S. imports Ø 105% Tariffs on U.S. Chickens (2010) Ø Substitute Airbus for Boeing ? Summary of the Case: China’s Retaliation ARGUMENTS FOR : ARGUMENTS AGAINST: ECONOMIC: •  Protect the U.S. from unfair competition brought in by China •  Protect tire industry workers in the U.S. •  Stop dumping caused by low cost producers- China ECONOMIC: •  Inflict economic damage on both countries •  Loss of economic welfare (in the U.S.) Ø  Higher prices Ø  Lower consumer choice •  Trade war POLITICAL REASONING : •  One of the key reasons President Obama backed up the International Trade Commission was to keep the American labour unions content and gain their support during the elections. •  Expected outcome of the protectionism policy applied Ø  Predicted increase...

Words: 683 - Pages: 3

Free Essay

Tariff Policy

...The Gazette of India EXTRAORDINARY PART I - Section 1 PUBLISHED BY AUTHORITY Ministry of Power New Delhi, Dated the 6th January, 2006 RESOLUTION No.23/2/2005-R&R(Vol.III) TARIFF POLICY 1.0 INTRODUCTION 1.1. In compliance with section 3 of the Electricity Act 2003 the Central Government hereby notifies the Tariff policy in continuation of the National Electricity Policy (NEP) notified on 12th February 2005. 1.2. The National Electricity Policy has set the goal of adding new generation capacity of more than one lakh MW during the 10th and 11th Plan periods to have per capita availability of over 1000 units of electricity per year and to not only eliminate energy and peaking shortages but to also have a spinning reserve of 5% in the system. Development of the power sector has also to meet the challenge of providing access for electricity to all households in next five years. 1.3. It is therefore essential to attract adequate investments in the power sector by providing appropriate return on investment as budgetary resources of the Central and State Governments are incapable of providing the requisite funds. It is equally necessary to ensure availability of electricity to different categories of consumers at reasonable rates for achieving the objectives of rapid economic development of the country and improvement in the living standards of the people. 1.4. Balancing the requirement of attracting adequate investments to the sector and that of ensuring reasonability of user charges...

Words: 7429 - Pages: 30

Premium Essay

International Business

...Governments Intervene in Trade? Political Motives Protect Jobs Preserve National Security National Security and Imports National Security and Exports Respond To “Unfair” Trade Gain Influence Economic Motives Protect Infant Industries Pursue Strategic Trade Policy Benefits of Strategic Trade Policy Drawbacks of Strategic Trade Policy Cultural Motives Cultural Influence of the United States Methods of Promoting Trade Subsidies Subsidies in Media and Entertainment Drawbacks of Subsidies Export Financing Foreign Trade Zones Special Government Agencies Methods of Restricting Trade Tariffs Protect Domestic Producers Generate Revenue Quotas Reason for Import Quotas Reasons for Export Quotas Voluntary Export Restraints Tariff-Quotas Embargoes Local Content Requirements Administrative Delays Currency Controls Global Trading System 1 General Agreement on Tariffs and Trade (GATT) Uruguay Round of Negotiations Agreement on Services Agreement on Intellectual Property Agreement on Agricultural Subsidies World Trade Organization (WTO) Dispute Settlement in the WTO Dumping and the WTO Subsidies and the WTO Doha Round of Negotiations The WTO and the Environment Bottom Line for Business Implications of Trade Protection Implications of the Global Trading System A comprehensive set of specially designed PowerPoint slides (designated ‘PPT’ below) is available for use with...

Words: 2958 - Pages: 12

Premium Essay

Trade & Investment

...The argument is agreeable that Trade liberalization happening in many countries in context of globalization especially in Asian countries like INDIA, Indonesia, China and other countries in Asia, has been helped by the economic reform measures taken. While talking about globalization and trade liberalization of INDIA, it’s important to know the major steps taken by India in last few years to be a part of the world market with foreign direct investment, free trade and levied tariffs on taxes, and other duties on like export and import duties etc. “Globalization is the process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world.” (Larsson, 2001) Guy Brainbant: says that the process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution. (Brainbant, 2006) Globalisation is a new mantra which has come to rule the world since late 20th century especially after important historical events such as Soviet Union breaking into pieces and end of world cold war since then the global picture has come into existence. The trend of relying market...

Words: 1029 - Pages: 5