Tariffs in the USA Essay

Exclusively available on Available only on IvyPanda® Made by Human No AI

Introduction

Tariffs have been part of the United States economic history. Alexander Hamilton who was the country’s first treasury secretary was the one who initiated the tariff issue. According to Hamilton, tariffs were necessary and were aimed at protecting the American manufacturer and they have been instrumental in the America’s trade policy up to date (Bloomberg 1).

Tariffs

The American government can impose trade tariffs in the following situations;

The first reason for imposing tariffs is to protect domestic industries from competition emanating from foreign firms; secondly tariffs are imposed in order to safeguard old and inefficient industries from any external competition, consequently tariffs are imposed as a measure for protecting consumers from dumping by foreign companies or foreign governments; dumping only happens when a foreign firm levies a cheap price in a domestic market, a low price is understood as one that is lower in a foreign market than the one charged in domestic market, in this case the producer might lose money since they might charge prices that are below the costs.

According a World Bank report, tariffs are considered an impediment to the economy and if they are eliminated in trade transactions then the world economy could sporadically grow.

In the United States, for example, tariffs are imposed on sugar which is a necessity and an important commodity; Tariff on sugar implies that importing sugar will be costly and this has the advantage in form of price support to the sugar farmers in the US and this has the net effect or disadvantage to the consumer since it will result to higher price of sugar.

If the sugar market could be free, the high price of sugar which in this case is artificial might attract low-priced imported sugar; it is due to this that the government is forced to intervene in the market by implementing trade tariffs.

The main reason for imposing tariffs is to put a ceiling on the supply of foreign sugar from the United States’ market which causes the domestic price of sugar to rise, the tariff effect has let to the doubling of sugar price as compared to the US market and this has attracted extra spending by the American consumers (Carbaugh 156).

The US government prefers tariffs as compared to quotas because quota is more restrictive than tariff; this is because a tariff results in the increase in domestic price but has the effect of limiting the quantity of goods imported into a country and only those importers who are in a position to pay the tariffs manage to get the product. Consequently, tariffs have the effect of offsetting price reduction of foreign producer hence slashing profit margins.

A quota is prohibited by the government due to the fact that it is more restrictive than a tariff and has the effect of preventing any competition. Whereas a tariff is determined by the market mechanism, a quota forecloses market mechanism. The government of the United States also prefer tariff to quota not as a matter of principle but due to the fact that it is a requirement of the World Trade Organization (WTO) (Carbaugh 154).

Conclusion

The government of the USA should not impose tariffs instead they should allow market liberalization. This is because tariffs result in the transferring of price burden to the consumer. Also by insulating domestic companies from external competition, the government will be opening an avenue for poor and substandard quality of goods.

The three most protected goods in America are tobacco, unshelled peanuts and French jam. Tobacco is protected at 350% tariff, unshelled peanuts at 163% and French jam at 100% tariff. This has largely contributed to the survival of these products in the market (Business 1).

Works Cited

Bloomberg. The US tariffs. Bloomberg business week, n.d. Web.

Business. 25 American products that rely on huge protective tariffs to survive. Busness Insider, n.d. Web.

Carbaugh, Robert. International Economics. New York: Cengage Learning, 2008. Print.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2018, October 10). Tariffs in the USA. https://ivypanda.com/essays/tariffs/

Work Cited

"Tariffs in the USA." IvyPanda, 10 Oct. 2018, ivypanda.com/essays/tariffs/.

References

IvyPanda. (2018) 'Tariffs in the USA'. 10 October.

References

IvyPanda. 2018. "Tariffs in the USA." October 10, 2018. https://ivypanda.com/essays/tariffs/.

1. IvyPanda. "Tariffs in the USA." October 10, 2018. https://ivypanda.com/essays/tariffs/.


Bibliography


IvyPanda. "Tariffs in the USA." October 10, 2018. https://ivypanda.com/essays/tariffs/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1