Are tariffs or limits on foreign imports a good idea?

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Tariffs and Limits
Introduction
The working economic dynamics of capitalistic economies are complex and easily affected by many aspects. Apparently, international trade is a delicate subject under the control of the World Trade Organization. As the world progresses and becomes a global village, the supply and demands for goods in any country must be monitored to ensure equilibrium is reached. However, given the nature of capitalistic countries, the government cannot just interfere with trade and trading practices because capitalistic forces control the market. Consequently, there are more saddle ways the government can monitor international trade.
Is it possible to monitor and regulate international trade through international organizations such as the World Trade Organization? Countries set up local organizations that will allow monitoring and supervision of international trade. However, critics have asked whether this is an effective method of supervising international trade. This is an effort to address supply of goods and services in response to the local demand. Through imports, countries are able to supply the much-needed goods and services at a competitive price. This allows the economy to thrive as opportunists will seek the cheapest prices in the international market and import the goods and services (Goff 17).
Fundamentals of international trade
The scope of international trade can take different perspectives. However, it is essential to look at aspects of international trade and evaluate their value in the economy. International trade is monitored and regulated by local authorities by imposing limits and tariffs on imports. There are many arguments for the use of such techniques by local authorities in an effort to protect the economic conditions of the country. Therefore, tariffs and limits on imports are a good idea for any economy mainly because of the need to have some control on international trade. A cost benefit analysis of tariffs and limits on international trade shows the positives outweigh the negatives.
The World Trade Organization is the main international organization in charge of regulating international trade. The main goal of the organization is reducing international restrictions and barriers to trade such as limits and tariffs. Economic studies have shown tariffs and limits on imports have a negative effect on local economies. Studies have also shown only local authorities and industry player’s benefit from tariffs and limits on imports. In an attempt to protect the local economy and industries against international competition, the measures put in place in the form of tariffs do more to harm to the economic structure and capitalistic principles than good (Cline 47).
International trade is crucial as it boosts competition since the consumer is given different choices of products to choose. Through international imports, the market is diversified and competition enhanced. Tariffs or duties are charges that are imposed of goods and services at the point of entry. They are charges in many different forms from taxes, duty charges, and even insurance costs. Different countries have different tariff regimes. However, high tariff rate would mean an extra cost to the merchant or trader. This would mean traders would incur extra operating expenses, which may be transferred to the consumer in an attempt to shield themselves from the harsh economic conditions.
Over the years, studies have shown that economies impose high tariffs and limits on imports in an attempt to shield the local market. However, this does not always work as competition is reduced as traders look for other cheaper destinations for their products. Therefore, it is vital to review the economic impacts of tariffs and there advantages before imposing them. A SWOT (Strengths, Weakness, Opportunities, and Threat) will give the needed insight into the effects of tariffs to an economy (Narlikar 39).
Thesis statement
Tariffs and limits are a good idea because they permit a given quantity of imports at reduced costs beyond which any excess limit is subject to heavy duty. There are various arguments that economists have made in support of this hypothesis.
Using international research on economic models, the research establishes the pros and cons of limiting imports. However, limitation is not an advisable economic strategy for thriving economies (Goff 17). Narlikar and Amrita’s book on international Trade and Developing Countries: Bargaining and Coalitions in the GATT and WTO illustrates the advantages of limits on imports. The book illustrates advantages outweigh the disadvantages. However, form Bagwell, Kyle, and Petros C. Mavroidis’ Preferential Trade Agreements: A Law and Economics Analysis, we see case studies on the impact of imports to an economy.
Protection of the local economy
An economy is made up of different aspects. In an effort to ensure the local economy, government agencies may choose to employ tariffs and limits on imports. The main aspects that are affected are the demand and supply aspect of the local market, local competition, employment statistics and local industries (Marshall 56). Through protection, do local authorities safe guard the competitive edge of the local economy in an effort to ensure prosperity?
Local Industry
International competition has meant local industries have to compete for market share with companies that operate with reduced operating costs. The main aspect of protecting the local industry against international competition is given the local players a chance to price their products competitively. Through tariffs and limits on imports, international traders are charged extra to do business in foreign countries. These businesses often transfer the additional costs to the consumer making their products expensive compared to locally manufactured products creating an artificial, competitive edge for local businesses.
Labor is a main component in operational structures of business. Employment laws vary in different countries and businesses may exploit the loopholes that exist. However, one may ask why this is the case. The cost of labor in developed countries is quite high. This translates to increased operational expenses, which are transferred to the consumer through higher pricing structures. International trader look for the cheapest way of producing their goods giving them a competitive advantage as they are able to price their products below industry standard as they have low costs of labor. Through tariffs and limits on imports, do local authorities are able to ensure an equal playing field for local businesses as international players are taxed in an effort to give local businesses a competitive advantage (Krishna 134)? This ensures the local industry thrives and prospers.
A classic example of effects of tariffs and limits on imports in relation to protecting the local industry is seen in the Moto vehicle industry. Local manufacturers are exempted from paying certain taxes, which are imposed on the industry while international manufacturers are not exempted. This forces international motors vehicle companies to price their cars a bit higher in certain counties. This gives local manufacturers a competitive edge as they price their vehicles higher and get good financial margins.
In developing nations, authorities use tariffs to levy taxes on imports in order to foster growth and development. In infant industry, staving off competition may ensure the industry grows and prospers. Through such measures, the economic stability will be ensured, as dependence on imports will be reduced, local employment boosted, and competitive edge of the industry increased.
Demand and supply
Similar to protecting the local industry, tariffs on imports can be used in the economic dynamics of supply and demand. With prosperity, the purchasing power of the population increases. The consumer is in a position to afford and buy more products. However, the demand that exists in the economy must be met with, and equal supply to ensure there is equilibrium. Therefore, local authorities use tariffs and limits to control the supply structure in the economy as international trade has an impact on other segments of the economy. Through controlling supply, does the consumer have a variety to choose from as the consumer has a vast array of options available to them?
Research has found that tariffs are also used by economies against product dumping. This is when international manufacturers enter a market with products priced either below international pricing models or below cost. When international businesses price their products below international accepted market prices, an arbitrage is experienced, as the product is cheaply available in that market. When products are priced below cost, the...