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Trade regulation is an essential aspect of international commerce, which involves such supervisory practices as the imposition of taxes. A tariff is a monetary value charged on imports and exports between independent countries (Hufbauer & Lowry, 2012). Governments implement a regulatory practices to promote and safeguard local industries by levying taxes on foreign products (Hufbauer & Lowry, 2012). In contrast, a quota is a limitation enforced by the government to constrain the number of goods that a nation can import or export at a particular time (Hufbauer & Lowry, 2012). Various governments impose these regulatory practices to control the volume of trade between countries. This paper explores the scope of international trade regulation in the context of tariffs on both imports and exports.
The global business environment involves several governmental policies and initiatives to regulate trade. Taxes imposed on steel and aluminum in the United States have both immediate and lasting effects on jobs (Amiti et al., 2019). Charging such taxes on goods may temporarily contribute to the employment opportunities for American residents, but in the long run, it facilitates unemployment in the respective industries (Amiti et al., 2019). Professionals Approximately at least 400,000 jobs are lost due to the lasting effects of the tariffs (Francois et al., 2018). Low-skilled and production workers are the most affected as a result of joblessness. The levies contribute to a decrease in Gross Domestic Product, and therefore, irrespective of the benefits the employees receive, other individuals in the economy suffer the detrimental effects of the tariffs (Francois et al., 2018). For this reason, the long-standing impacts on the respective industries outweigh the immediate effects on each sector.
The tire tariff may also come with several consequences to the entire economy of the United States. From an economic stance, the effect of imposing tire tariffs was mixed. The program safeguarded approximately 1,200 jobs in the tire production sector, but it came at the cost of about 1.1 billion USD to local consumers in the form of high prices (Amiti et al., 2019). Consequently, the customers’ additional expenses on buying tires decreased their expenditure on other retail products, implicitly lowering employment in the retail segment (Francois et al., 2018). While the tire tariff scheme’s goal was to revive a straining local tire industry, its impact had inadvertent repercussions on other measures of the United States economy.
Generally, tariffs effectively alter the immediate economic status of a nation since they safeguard domestic manufacturers and industries by guaranteeing the consumption of their products. However, they can also undermine a nation’s economy in the long run since the consumers lack options and spend their money on expensive imported or local goods (Hufbauer & Lowry, 2012). Such phenomenon also contributes to the uneven distribution of gains, limited employment and consumption, and detrimental effects on other industries in the absence of free trade (Amiti et al., 2019). As such, tariffs tend to change the economic landscape and performance of a country.
In conclusion, this paper has explored the scope of global trade regulation and discovered that the taxes imposed in the tire sector created jobs for the local residents, but it also raised prices for the customers. Such trade restriction policies may come with both favorable and adverse impacts on a nation’s economy. Therefore, while controlling commerce facilitated and encouraged local consumers to promote their homemade products, the initiative has also led to the depreciation of nations’ financial output through massive unemployment.
References
Amiti, M., Redding, S. J., & Weinstein, D. E. (2019). The impact of the 2018 tariffs on prices and welfare. Journal of Economic Perspectives, 33(4), 187–210.
Francois, J., Baughman, L. M., & Anthony, D. (2018). Policy brief round 3: ‘Trade discussion’ or ‘trade war’? The estimated impacts of tariffs on steel and aluminum. Trade Partnership Worldwide, LLC/The Trade Partnership, 2.
Hufbauer, C.G., & Lowry, S. (2012). US tire tariffs: Saving few jobs at high cost. Peterson Institute for International Economics.
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