Tariffs and Quotas Essay Example | Topics and Well Written Essays - 3250 words

Tariffs and Quotas - Essay modeling there are many basic similarities between the tariff and the quota, particularly in the way they both(prenominal) relate directly to economic relations within and without a nation there are some(prenominal) basic differences as well, however, which determine which of these strategies should be employed in any particular situation. Figure 1 lists the ways in which tariffs and quotas and the same and different.Originally speaking, tariffs were imposed in early empires and principalities ancient Germanic, Slavic and Arabic societies imposed tariffs on imported goods to protect their own established, small economies while simultaneously strengthening barter ties and making beneficial political and economic connections with other parts of the world (Heichelheim, 1957, p. 111). It was the foresight of ancient social club leaders that has led to the current state of outside(a) trade and helped formulate the basis for contemporary economics. revenue enhancement tariffs essentially help to maintain the structure of a local parsimony despite the influx of outside(prenominal) goods and produce some countries have little income and must rely on tariffs to keep their economies stable (Howard, 2001, p.226).Quotas were introduced in cultures such as the Az... the establishment of the Soviet Union as a way to unite the workers and batten that e very(prenominal)one was doing their part to keep the economy running (Vaillant, 1962, p.190 Ellman and Kontorovich, 1998, p.221). The idea of the tariff is also quite ancient because since the very beginning of human society there has always existed competition between different groups of people. Despite affectionate relations, certain products and produce that is available to one group may not be available to the other, and so trade is a natural occurrence between communities, cities, regions and countries.Figure 1Tariffs and Quotas* Can pertain to international trade* Responsible for nati onal revenue* Regulate local economySIMILARITIES* Regulate international economy* Both can strengthen international trade ties* Tariffs are always used in hurt of international trade, whereasDIFFERENCES* Quotas may relate directly to internal production* Tariffs can greatly impact impertinent economy* Quotas create revenue for local sellers* Tariffs create revenue for the governmentThe TariffStrictly speaking, a tariff is the tax that is placed on a foreign import upon its entry into another country. There are three basic types of tariff revenue, protective and prohibitive tariffs. Each of these serves a specific purport within the economy and is responsible for bringing in money from different market sectors with overseas origins. The delusion of tariffs on various imported goods ensures that the nation that imports