Theory question 107
International TradeSection B: answer three questions only from this section.
(a) Define tariffs (b) What are the reasons for imposing tariffs?
Show the model answer
Model answer
(a) Tariffs are taxes (duties) imposed on goods entering (or leaving) a country
(b) To protect infant industries from foreign competition
To raise revenue for government
To correct a balance of payments deficit by reducing imports
To discourage importation of harmful or luxury goods
To prevent dumping
To protect employment in local industries
To retaliate against tariffs imposed by other countries
To conserve foreign exchange
Explanation
Define tariffs, then explain at least five reasons.