Who Benefits From A Tariff Or Quota ?
The primary aim of international trade is to remove the trade barriers and such a removal, enables entry of more number and variety of goods in the domestic market. Consumers get benefited as they get wide variety to choose from. Due to entry of foreign goods competition increases and also gives the domestic producers chance to transfer their goods across the borders.
Tariffs or quota are aimed at restricting free trade also it is a means of income for the government. Tariffs are imposed on foreign goods and the money thus collected goes in the hand of the government as a tax. However, a quota is an amount collected by all those suppliers whose goods are being shipped. The primary aim of imposing tariff are safeguarding domestic employment, safeguarding consumers, infant industries, national security and reprisal.
We cannot predict whether the advantages of tariffs are applicable to all. At one side it is true that government experiences an increase in its revenue as more imports takes place. Also, the domestic companies are being benefited in many ways, but if one sees from the consumer point of view, one would notice that the benefits are not well pronounced except for the fact that they get to see variety. The imported good comes with high price tags and are affordable by people who are earning more. From a short term perspective tariffs could be beneficial to all, but if you see from the long term perspective, it leads to decline in the economy and destroys the domestic industry.
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Who Benefits From A Tariff Or Quota ?
