Paper Example on Trade Barrier and Tariffs

Paper Type:  Essay
Pages:  4
Wordcount:  958 Words
Date:  2022-05-16


Trade barriers and tariffs are monetary and non-monetary obligations that are imposed by a country to restrict other countries from easily accessing the market (Kreps and Juanita 27). Different countries have different measures for varying products. Among the most current controversial tariffs were the ones imposed by President Trump against Chinese steel. The tariffs are meant to restrict the cheap steel from China from flooding the American market and hence unfavorably competing with the local industries (Egan and Guimaraes 308). There are many implications, both negative and positive, that come as a result of such tariffs between the two countries. According to Trump the United States government loses billions of dollars as a result and this kills many American industries. Thus, the paper explores the economic implications of trade barriers and tariffs between two countries, arguing in favor of trade barriers and tariffs imposition.

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The government imposes these tariffs to protect the domestic employment through stable industries. The growth of local industries is among the most highly esteemed objective for any government (Elwell 42). These tariffs are mainly imposed by the stable economies in the world to remain at a competitive edge in the global market. Foreign goods threaten the local market due to their low costs presenting a tight competition to the local industries. For example, Trump says that more than 30% of the steel industries will close if the government remains passive about the matter leaving more than 50,000 Americans unemployed (Anon, n.d.). If these industries are not protected from the unhealthy competition, they may go out of business leaving the people in the respective sectors unemployed. Through the imposition of tariffs, the government can nurture the local industries until they can be able to compete favorably with their international counterparts.

The government raises revenue through the tariffs and thus growing its economy. Tariffs are monetary restrictions obligating the importers of foreign products to meet a certain amount of taxes and other charges before they access the market. For example, China exports steel to the United States worth more than $1.1 billion annually, with the imposition of tariffs the US government will earn an estimated $100 million (Anon n.d.). The country is, therefore, able to increase its financial muscle through small taxes. Given that the economic strength measures the global strength, the nation imposing these barriers will also add a considerable amount of money to the budget basket. Additively, the amount of money got can be used to subsidize the products made in the local market to ensure that they can produce goods at competitive prices.

The trade barriers and tariffs improve the trade deficits. Increase in the taxes for imports lowers the demand for foreign products through high prices. The prices of the imports will be high, and through the competition in the market, the locals will be attracted to the local products for maximum savings. If a country imports more than its exports, make it operate at a deficit which is not excellent or favorable for the economy. All developed countries have their exports more than imports, and a threat to such a situation is guarded comprehensively (Wang and Yongnian 16). Having a monetary deficit in a country causes a loss of local currency to other countries thus destroying its economy gradually. A deficit is more of a loss than an advantage to the country. Therefore, it is necessary for the government to ensure that the country does not lower its economic status and relevance.

On the contrary, some economists argue that there should be freedom of doing business in all countries for fair competition to all. First, the trade barriers may be costlier to a country than the returns, for example, other countries may retaliate and impose similar tariffs (Egan, and Guimaraes 297). China had threatened to impose tariffs on American products if the US goes ahead with the tariffs on steel. Given that the US and China are the most exceptional business partners regarding volume and value of goods, this could have resulted in collapse and economic setbacks for both countries. This could have cost the American government significantly on the economy and thus reduced global economic growth. Additively, tariffs and barriers increase the costs of production from the costly inputs that result from the tariffs (Elwell 12). The local markets will, therefore, have to sell their products at higher costs than they did initially. Finally, the consumers are less satisfied due to lack of enough products from which they can make a selection.


In conclusion, the imposition of trade barriers accrues a country more economic benefits as opposed to the few setbacks that the nation may experience. For a nation to make significant economic progress trade barriers and tariffs could be the first step in that direction. For a country to minimize the limitations that come along with the tariffs proper weighting should be done on all surrounding factors and issues. The country should also be a well-founded financial icon in the global market for them to restrict imports. All in all, financial stability in the country is likely to occur if proper tariffs and considerations are made before and during imposing the barriers.

Works Cited

Anon, (n.d.). Trump announces steel and aluminum tariffs Thursday over .... [online] Available at: [Accessed 2018].

Egan, Michelle, and Maria Helena Guimaraes. "The Single Market: Trade Barriers And Trade Remedies." JCMS: Journal Of Common Market Studies, vol 55, no. 2, 2016, pp. 294-311. Wiley-Blackwell, doi:10.1111/jcms.12461.

Elwell, Craig K. Trade, Trade Barriers, and Trade Deficits: Implications for U.s. EconomicWelfare. Washington, D.C.: Congressional Research Service, Library of Congress, 2005. Print.

Kreps, Clifton H, and Juanita M. Kreps. Aid, Trade, and Tariffs. New York: Wilson, 1953. Print.

Wang, Gungwu, and Yongnian Zheng. China: Development and Governance. Singapore: World Scientific, 2013.

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