The other day I was with a friend discussing the economic situation regarding the country that we live in. And it crossed my mind this incidence that I had the other day. About 3 days ago I ordered an electrical device from an online shopping site, not because it was not available in our local store but because the online price was a good deal. I would’ve saved over 60$. However, upon the arrival of the package I was asked to pay double the shipping fee. I checked the paper and it claimed that I had to pay 25$ just for tariffs. Now at first I was disappointed, wasted my time and almost some amount of money was applied for this device, and I did not know about this new rule of pay tariffs on imports. Yet, it got me thinking; what does that mean?!
Take it from the beginning, when a country is in a peg with another country lets say in the case the USD it is simply not allowed to fix its money supply in response to inflation of the USD or any other economical fluctuation. And looking at the previous post “Why low oil price and high USD in not a good indicator?“I clearly mentioned that the US dollar is sky rocketing in respect to other currency. Therefore, it is up to my country to fix its peg ratio with USD in order to stay in the equation.
Tariffs are good!
I’ve always found it hard to read a lot blogs. As soon as i see the amount of words I freeze therefore, I’ll be presenting my thoughts as points:
- Tariffs will secure your job and provide jobs.
- Not only will it increase local employment rate [by sometimes 15%] but also,
- Will secure your local business from failure.
- Tariffs will increase GDP
- Higher GDP = Higher standard of living. [not in all causes but in the majority]
- It will get your country out of debt and financial crises.
- Tariffs strengthen local currency.
- Tariffs will prepare the country for an economical prices.
- This is the most important point I would like to elaborate on. When Tariffs are imposed local market is forces to accept competition, lower prices, and depend on its self. Thus, the county is less depended on buying things from other countries. Of course according to the simple “Opportunity Cost” model this will force people to consume more. Yet its better than fall into inflation/recession or another economical crises. A good example in Japan after WWII, it cut all imports and supplies to only grow depend.
Some times the things hurt much, help us learn a lot.
What do you think?! should we love Tariffs?!