Pros and cons of tarriffs - 1256 Words

Week 3 Individual Project According to Essentials of Economics, a tariff is a form of excise tax, one that is levied only on sales of imported goods (Krugman, Wells, and Graddy 538). Tariffs are generally imposed for two purposes, to protect domestic industries and as a source of revenue (Tariff). The effect of a tariff on a small or a large country would be higher domestic prices because the cost of the tariff is passed on to the consumer (The Basic Analysis of a Tariff). Consumers would be deterred from buying that particular import because of the cost factor. It would also cause there to be a surplus of that import. A high tariff on imports would have the effect of switching from imported goods to goods produced domestically;†¦show more content†¦The IMF is interested in trade creation and has the power to lend money with conditionality (Rose 682). According to the IMF website, they exist for 3 purposes: Surveillance involves the monitoring of economic and financial developments, and the provision of policy advice, aimed especially at crisis-prevention. The IMF also lends to countries with balance of payments difficulties, to provide temporary financing and to support policies aimed at correcting the underlying problems; loans to low-income countries are also aimed especially at poverty reduction. Third, the IMF provides countries with technical assistance and training in its areas of expertise. Supporting all three of these activities is IMF work in economic research and statistics (What the IMF Does). The WTO, World Trade Organization, was founded in 1995 and its headquarters are in Geneva, Switzerland. The WTO boasts 155 member countries and its purpose is to deal with the rules of trade between nations (The IMF and the World Trade Organization). These two institutions work together to ensure a strong system of international trade and payments that is open to all countries (The IMF and the World Trade Organization). While both the IMF and WTO are involved in various capacities in international trade, the WTO has more of an impact when it concerns global rules of trade, tariffs and trade agreements, while to IMF is moreShow MoreRelatedHow Economic Globalization Has Fostered Globalization of Critics and Criticism?3991 Words   |  16 Pagesthe world (Naik, 2011; Trebilcock, 2000). However, one cannot totally ignore the fact that some critics recognize the negative effects or consequences of economic globalization as even the very concept of globalization itself may have specific ‘pros’ and ‘cons’. As argued by Naik (2011), while there are a number of advantages in economic globalization, there also exists a number of disadvantages in economic globalization as a phenomenon. Many critics point out that the countries’ interdependence with