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3 years ago
In a short essay, explain the negative effects of high tariffs on international trade and business. How do high tariffs impact economic growth?
Textbook 

International Business: Strategy, Management, and the New Realities


Edition: 1st
Authors:
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2 years ago
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Just as people want to avoid paying taxes, firms try to avoid paying tariffs. Because tariffs have their greatest affect on imports, firms may enter countries via non-exporting entry modes, such as FDI. Governments collect less revenue from firms in the long run if tariffs are too high. In addition, high tariffs have been known to trigger smuggling. For instance, high duties on cigarettes in Canada have led to smuggling by those who transport contraband tobacco across the Great Lakes of the northern United States into the Canadian frontier. Because high tariffs inhibit free trade and economic growth, governments have tended to reduce tariffs over time. In fact, this was the primary goal of the General Agreement on Tariffs and Trade (GATT). Countries as diverse as Chile, Hungary, Turkey, and South Korea all have liberalized their previously protected markets, lowering trade barriers and subjecting themselves to greater competition from abroad. Developing economies have been lowering their tariff rates since the 1980s. Continued reductions in tariffs represent a major driver of market globalization.
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wrote...
2 years ago
Thank you, JewelSmith

You were correct!
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2 years ago
Hour Glass with Flowing Sand Was waiting for your feedback, thanks for sharing
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