Decision making in trade-DB2 Essay Example | Topics and Well Written Essays - 500 words

Decision making in trade-DB2 - Essay Example The government would create a tariff on importing coffee and this is how the government would benefit from there. Whilst on the other hand, the ad valorem tariff can be described as a tax that is specifically a percentage of the import value. However, the tariff may be applied in two ways; either charged based on the value of the imports or based on the quantity of goods. Then the ‘prohibitive tariff’ as the name suggests is one marked so high, it either prohibits or lessens the import levels on a product. Then there is the ‘Protective tariff’. The tariff bears a lot of pros and cons. This type of tariff may either foster the growth of the economy or make goods extremely expensive on the behalf of the customers. The researcher strongly believes that the main reason for high tariffs on agricultural produce is one way of controlling the flow of imported agricultural products. Not only that, it is stratagem used to protect small local farmers from competition f rom foreign companies. In doing so, competition in this market for farmers would be lessened. As such imposing tariffs on products is one way to position consumers to support local products especially in domestic countries. The roles played by tariffs have unavoidable effects on prices from the imposition. The foreign exporters keep the price that they charge for the product; however, the domestic price of the imported product rises by the value of the tariff.