can anyone explain to me what a tariff is and how it helps infant industries grow?

Answer 1

A tariff is a tax on imported goods. The idea is to promote or protect local industries.

Japanese car manufacturers are some cunning people. They decided to break into the American car market to get a piece of the huge market. Since the Japanese tend to think in the long term the Japanese Car companies decided to sell their cars at below their own cost. If they clobbered the American Car Companies then they could take over the market. Then they could charge more for their cars and rake in huge profits, not to mention the secondary markets from selling car parts.

To prevent this from happening the US Government instituted a tariff to protect the American Car companies. These weren't infant industries, but it helped keep them in business.

Japanese steel is usually cheaper than American steel. If a new American steel plant tried to open up it would have to face all this competition. Since +50% of all American small business fail in the first year a tariff on steel could help that new Steel Plant.

The Chinese don't want some American companies to get established in their country so they use high tariffs on American goods to keep the American companies out.

When one nation starts protecting its own industries with tariffs against another nation. The nation that is being victimized by those tariffs can get angry. That nation can decide to put their own tariffs on the first countries goods thus creating a tariff war. In revenge the first nation adds additional tariffs, which causes the victimized nation to add more tariffs and so on.

According to Wikipedia: http://en.wikipedia.org/wiki/NAFTA
“North American Free Trade Agreement (NAFTA) is a free trade agreement among Canada, the United States of America, and Mexico, based on the model of the European Communities (today: European Union). NAFTA went into effect on January 1, 1994.

Trade components

NAFTA called for immediately eliminating duties on half of all U.S. goods shipped to Mexico and Canada, and gradually phasing out other tariffs over a period of about 14 years. Restrictions were to be removed from many categories, including, but not limited to, motor vehicles and automotive parts, computers, textiles, and agriculture.”

Answer 2

A tariff is a tax imposed by the government on certain imported goods coming into a country.

The way it works is two part. First the monetary part of the tariff gives the government money to spend for improving the country. This usually is not that big but added with other revenue-generating ways it does help overall.

Secondly, it helps the local industries. This is because as foreign products have to recover the loss of revenue from the tariffs, they generally have to raise prices. For instance a bag of chips in Japan costs 100$, but in Korea its 110$ because the government imposed a 10% tax. The end consumers are the ones that end up paying it. What's the alternative? Locally made products who dont have to raise prices to cope with the tariff.

All things being equal (foreign and local company having equal quality, op-costs, etc) the local company will always outprice the foreigner. In economics however it is not that simple. There will always be other factors which will affect pricing.

If lets say the foreign company is able to have low operation costs, thru economies of scale, and provide a product with high quality, they can then export the product to another country where the industry isnt that strong. They would be able to eat the tariff and still be competive in pricing because its costs them less to produce the same product.

Tariffs would help the local industries if the general business environment of prouction in the local country can help the growing business be competitive.

Answer 3

A tarriff is a tax, usually on imported goods. It may help native industries grow by increasing the cost on imported goods. This protects the native goods, either by allowing them to be sold for a lower price, or at least a competative price.

Answer 4

its when a company sets a fixed price or rate on their product, so i guess its to help the company estimate their costs and income, cause its easier when you know what the price everything is.