How does tariffs affect trade and competition in Europe?

Answer 1

Considering steel, It will not affect us directly at first, as we went through the high unemployment and job losses in the 1980's when we got rid of our obsolete industuries, however...

The European Union has vowed to protect its own steel industry in the wake of the US decision to slap punishing penalties on imported steel. This decision floutes international trade rules, and this US decision would hurt the EU in an unjustified and unfounded way. George W Bush's decision is in response to pressure from the US steel industry, which is struggling to compete with cheaper products from abroad. The EU is afraid of a flood of surplus steel imports from countries such as Japan which will no longer be able to compete in the US.

A host of other countries have expressing their worries over the US decision, including Japan, Brazil, Australia and South Korea. It would not only be bad not only for the world economy, but also for American consumers, who would be forced to pay more for steel products. The decision was described by US advisers and lawmakers as a compromise approach, designed to protect US industry while minimising criticism from abroad, and from American manufacturers that rely on cheap steel.

Several trading partners, including Canada and Mexico, are exempted. European steel-makers, including Britain's Corus, fear that US tariffs could limit access for their product in the lucrative American market as well as diverting exports from other countries to Europe, harming thier local industry.

So - A tariff is a tax on foreign goods upon importation. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid it is the easiest tax to collect, and the cost of collection is small. Smugglers of course seek to evade the tariff.

However, protective tariffs have disadvantages as well. The most notable is that they increase the price of the good subject to the tariff, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on steel can make US automobile manufacture less competitive. They can also backfire if the European countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and disadvantaging both sides.

Answer 2

I hope you know better than to say that in your report!! The correct grammar would be: How do tariffs, not how does!