Consequences Of Trade Restrictions And Tariffs

Consequences of Trade Restrictions and Tariffs


     How does imposing trade restrictions affect a country's macro economic

objectives?


     Nowadays all countries need to trade between themselves. Countries

always lack of some type of good and the only way they can get them is by

importing them from other countries which do produce the desired goods. However,

countries many times import products they are able of producing and now, this

isnīt a matter of need; itīs a matter of taste in order to give the consumers

the possibility to choose.


     Both imports and exports contribute, in different ways, to the

development of a certain economy, for example the Peruvian one. Nowadays, Peru

has an open economy which allows importing and exporting. When a country imports

any product it can be because it doesnīt produce it or because it wantīs to give

greater variety to certain areas of the market. This last case should be like a

stimuli for national producers to produce more and with a better quality and to

find ways of having lower costs of production. This aims come to light because,

as foreign products enter the market, they may be of a better quality and even

cheaper than the national ones. Now, the consumers will have more possibilities

to choose from and, it is very probbable that they will choose the cheaper and

brand new products. So, if national producers donīt do anything in order to

improve thier products, then they will be in danger of going to bankruptcy. As a

result of this, the national products have to seek, as I said before, for

cheaper costs and better products.


     When this occurrs, then national products are ready (or at least have

more possibilities) to compete in international markets. Supposedly, now they

should have a better quality, they should be cheaper and so, they are ready to

be exported. When products are sold at international markets, then this brings

more money into the peruvian economy; as exports are like the salary of a

country (the most important source of money), then this is very positive for the

peruvian economy because we can say that the national income has increased.


     So, we have seen how having imports and exports are very benefitial for

any country. However, countries many ti
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