Question

1) What is a tariff and how does it affect prices of goods?

2) Do you think it is important for two countries to engage in trade deals, or to avoid trade deals, and negotiate in this manner? Why or why not?

3) How do tariffs lead to trade wars, and what does that do to the global economy in the long-run?

Answer 1

Answer - Tariff is the monetary charge which is imposed by the importing country on its imports to reduce them from coming into the country in order to protect the domestic countries. Tariff can be applied on the per unit unit or on the fixed volume of imports. The tariffs increase the price of the imports thus making the item expensive to import. This raise in the price of imports , discourages them because consumers demand lesser imports at higher price. Thus , it helpd to reduce the imports of the country