8 Week CheckPoint:
International Trade Debate
A tariff is usually a tax that one country sets on the imported goods or services of other nations.
Tariffs have a reputation of being troublesome, some say more tactics and not permitting a thing.
However; there must be some kind of regulation on trade between countries. A quota is a trade
restriction set by a country to maintain and secure a countries interest. This happens by limiting
the amount of goods that a country can import into another country over a period of time. In the
United States this was set up to protect interests economically but maintaining healthy trade
relationships with other countries. Although these two particular trade tools were designed to
guard the United States economic interests some feel they lead to corruption. Smugglers seek to
evade tariffs and quotas; they also hope to escape high prices given to consumers. There is less
competition that seems to be evident between domestic and international goods and tend to be
less expensive.
The strength of the dollar is really more about interest low rates and not so much about
international trade. However; if the FED has low interest rates, less international investors invest
in the dollar. When the dollar is strong in the United States tariffs tend to be lower and
consumers will spend more. When the dollar shows weakness the United States will increase
tariffs. This is to protect the economy and potential jobs. Some countries, including the United
States, outsource jobs. This can deplete the country of jobs because they are being filled in others
countries where companies can spend less on wages. Domestic trading is the most beneficial for
domestic producers. When there is less competition and inflation of consumer goods it is least
beneficial to domestic consumers, because consumers will spend less due to higher prices. Free
international trade circulates the worlds economies through broad trade between nations then
causes competitions for goods and services between businesses. This in turn contributes to fair
prices and better produced products and encourages consumers to spend more.