【国际贸易理论课件】【International Trade Theories】CHAPTER 4Protection of Domestic Industries The Tariff.pptVIP

CHAPTER 4 Protection of Domestic Industries: The Tariff OVERVIEW Despite gains from trade, artificial barriers interfere with flow Commercial policy product of pressure groups Tariff most common barrier Tax on commodity crossing international border, designed to raise import price and protect industries which have a comparative advantage Some Institutional Considerations Tariffs Import duties Export taxes Direct quota restrictions Export bans Tariffs and resource allocation Some Institutional Considerations Protection vs. Revenue Ad valorem duty (fixed percentage of value) Equitable and constant Specific duty (fixed sum per unit) Easy to apply and administer FOB, CIF, FAS Compound duty (combined tariff) Some Institutional Considerations Tariff-setting a congressional prerogative Tariff classification long and complex Uncertainty hinders trade Statutory tariff Preferential status Tariff schedule spikes Economic Effects of the Tariff Who pays the tariff? Import country consumers Exporters Terms of trade Export price divided by import price Volume of trade Both countries benefit Small countries vs. large countries Different abilities to affect world market prices and terms of trade Economic Effects of the Tariff Exports and imports determined by domestic and prevailing international prices In small importing country, domestic prices rises by full amount of tariff In large importing country, price rises by portion of tariff, exporting country absorbs other portion The Belgian Market for Coffee The U.S. Market for Coffee Economic Effects of the Tariff International price of imports artificially raised by full amount of duty Some consumers curtail import consumption, switch to less desirable domestic products Production of substitutes expands, drawing resources away from other industries (presumably higher ranking in comparative advantage) Loss of production efficiency for economy as a whole Income redistributed from consumers to producers of protected commodi