ADMS 1000 Chapter : How Tariffs Affect the Economy [Reading - Mike Moffatt]

• School: York University
• Department: Administrative Studies
• Course: ADMS 1000
• Professor: Eytan Lasry

Document Summary

Three situations in which governments often impose tariffs: to protect fledgling domestic industries from foreign competition, to protect aging and inefficient domestic industries from foreign competition, to protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is too slow . In most instances too low is generally understood to be a price which is lower in a foreign market than the price in the domestic market. In other instances too low means a price which is below cost, so the producers is losing money. The world bank estimates that if all barriers to trade such as tariffs were eliminated, the global economy would expand by billion dollars by 2015. The economic effect on tariffs can be broken down into two components: the impact to the country which has a tariff imposed on it, the impact to the country imposing the tariff.