TARIFF ~ trivia ~ ~ discussion ~

DEFINITION ~ A scale of duties imposed by a government on goods imported or exported ~ A tax that adds to the cost of imported goods. KINDS 1. As to Purpose a. For Revenue ~ tariff is a particular type of taxation (taxes are known to generate revenue for the government) b. For Protection Reasons: i. Protecting Consumers ~ a government may levy a tariff on products that it feels could endanger its population. ii. Infant Industries ~ the government of a developing economy will levy on imported goods in industries it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods while forcing out non-domestic industries by more competitive pricing. ~ DOWNSIDE: If an industry develops without competition, it could wind up producing lower quality goods. iii. Retaliation ~ Countries may also set tariffs as a retaliation technique if they think that a trading partner has not played by the rules. ~ Retaliation can also be employed if a trading partner goes against the governments foreign policy objectives. 2. As to Manner of Imposing Rates a. Autonomous ~ rates of customs duties are established by legislative actions. ~ Changes in rates are subject to the auction of the law-making body b. Conventional ~ the results of convention or agreement

3. As to Schedule a. Single Schedule ~ also known as unilinear or one-line ~ imposes the same rates on imported goods of the same nature and kind regardless of countries of origin b. Double Schedule ~ ~ provides for two different rates of duties applicable on every particular imported good; one rate sets the minimum and the other the maximum c. Multiple Schedule ~ ~ specifies different rates of import duties applicable to different countries. TYPES 1. Specific ~ Fixed fee levied on one unit of imported good. This tariff can vary according to the type of imported good Ad Valorem ~ Levied based on the percentage of the goods value

~ case analysis ~
1. How can the robot ruin the economy of the south (as claimed by the old woman) The robot in the video represents tariff imposed by the north on goods exported by the south. If tariff will be imposed on their (Souths) imported goods, the selling price of these goods will increase in the north; as a result, the northerners will prefer buying goods produced by the north. If this happens, companies from the south will incur lesser gain or even loss which may result to a drop in the Souths economy. 2. Do you agree that tariff can both be good and bad to consumers? Why? Yes. Tariff is imposed by the government on imported goods to protect its consumers from harmful products. However, not all imported goods are harmful; sometimes they are even of better quality. If a consumer really wants to buy something made abroad, he will have to pay more than the actual cost of the product. Second, because competition is eliminated or lessened, domestic companies tend to be more relaxed in producing goods and care less about the quality of their products. The end consumers are at losing end by having to bear with these low-

quality goods because they have no choices unless they can afford to spend more money for imported goods. 3. How does tariff affect the prices of goods (imported and domestic)? Tariff increases the price of imported goods because producers will have to pass the amount they paid to their buyers. Domestic goods can also be sold at higher prices because domestic producers need not reduce their prices from increased competition.

~ quiz ~
Questions According to investopedia.com, tariff is imposed on ____________. What are the two kinds of tariff according to purpose? Single Schedule is also known as ____________. Using Ad Valorem, how much tariff will Japan pay for one Uniqlo t-shirt considering the ff. given. Cost of shirt: 500php Tariff rate: 20% Fixed tariff for shirts: 150php Answers Imported Goods For Revenue , For protection Unilinear or One-Line 600php

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