The Effect Of Tariff On International And Local Trade
Just like any other organization, the business may also be governed by a set of rules to ensure the smooth running of all the operations conducted. Both the international and local trade are maintained by the rules which involve the importation of tax laws known as the tariffs. The nations may choose to comply or not. These charges are sometimes expensive hence hindering international trade in the country; perhaps this may lead to the beginning of the downfall of the economy. However, think of it when these tariffs are not there i.e. establishment of free trade. This may lead to the illegal entry of products into the nation (Shapiro, 2014).
The problem of choice may have its effect here. The government may decide to enforce free trade in the country or may choose to impose protectionist policies to protect the locals. Both of the choices have the advantage and the disadvantage (Shapiro, 2014). Perhaps when the government goes for free trade, this will enhance competition and hence desire for more innovation among the locals. However, this may discourage the locals from doing their business effectively due to the existence of cheap and available products in the market; thereby a war may arise between the government and the local traders.
The desire of whether to have free trade or not varies from one industry to another. For example, when we look at the United States of America, some agricultural sector in this nation suffers no harm to the existence of free trade or not. This is because the farmers in the USA believes that globally they are the best. This is the opposite of the sugar cane farmers who face completion from other countries (Shapiro, 2014). So the issue here is the competition among the traders. Every nation, therefore, needs to strengthen the locals to meet the standards of trade internationally.
Shapiro, M. (2014). Why trade matters. The Brookings Institution. Received from https://www.brookings.edu/wp-content/uploads/2016/06/Trade-Global-Views_FINAL.pdf