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Tariffs in American history + low tariff policy[edit]

These sections of the article is large enough, and different enough, to form their own article. I dont think this article should start covering the history of tariffs in every single country, it distracts away from the topic at hand. Dupz 23:51, 10 November 2005 (UTC)

  • Thanks to recent world trade agreements, tariffs are mostly of historical importance, and therefore need historical treatments in an encyclopedia. Most of the scholarship has focused on the tariff policy of the largest economies (Britain to 1880 and US since then.) I also added more on Canada. Rjensen Rjensen 07:43, 11 November 2005 (UTC)
  • I dont doubt that the content deserves to be in the encyclopedia, but I just think that we should stick with brief summaries of tariffs in regional history, and put what we have into an article, perhaps named "Tariffs in North American history". I think we should stick with things like arguments for/against, and the economics of tariffs. Dupz 08:49, 14 November 2005 (UTC)
  • Today's arguments for and against tariffs are either based on mathematical economics (which is covered in the article), or historical evidence. Every recent discussion of tariffs contains many historical references, and it is almost impossible to engage in a discussion for/against tariffs if you don't know tariff history. So it belongs with the main article. What the article DOES need is more on the tariff history of Britain and Germany, which are also important models. I did add material on Canada and plan to add some British material soon. Rjensen Rjensen 18:11, 14 November 2005 (UTC)

Merge from Protective tariff[edit]

SupportTuvok[T@lk/Improve me] 07:39, 27 February 2007 (UTC)

support - there is nothing in the other article that isn't in this one, so I've simply redirected it. DJR (T) 17:11, 16 May 2007 (UTC)

The analysis model[edit]

The analysis is exteme, it is right for a "small country"(small consumption amount) with less efficient producers. For a large country, there is no such thing that its supply is elastic, but the analysis is not deviate too much (The S will appear on the diagram). However, when the country's producers are equally efficient or much more efficient than the world, no matter it is small or large, then the diagram is wrong! More efficient than the world means at the world price, producers can afford to produce more than others. The analysis need to be changed, or just state that it is only suitable for a less efficient small country. Jackzhp 15:32, 23 May 2007 (UTC)

Comparative advantage and trade restrictions[edit]

The analysis is misleading for any country, as it assumes that the entire economy is at a comparative disadvantage. The model is a reasonably good (though incomplete) presentation of the economic situation from the perspective of the few inefficient producers within the local economy (or as the article calls them, the "heroes") who are getting squeezed by the shift in the local economy toward more productive areas.

Despite the non-neutrality of the term, "heroes" may be apt in that tariffs generally arise to protect traditional industries within a local economy, which the local population may see as having some cultural benefit.

Within a given state of technology and innovation, to provide more of one good or service necessarily involves providing less of others. The tariff will, as described in the analysis, shift the local economy towards production by the inefficient "heroes", but at a cost to those who are engaged in more productive enterprises.

For that reason, I think that the article could be improved by retaining the limited economic analysis it presents, but expanding the analysis with multiple goods (two goods at a minimum) to show what happens in the economy as a whole. That would provide balance between the benefits of trade to the nation as a whole and the disadvantages of such liberty to the inefficient "heroes".

That is, the social issue that is raised in any dynamic economy is what to do about people who have specialized in areas that are no longer an efficient use of the nation's resources. These people may at one time actually have been heroes.

Comparative advantage[edit]

The primary argument widely advanced for trade is that it allows local economies to apply their scarce resources on their areas of comparative advantage, and use trade to buy other goods.

Briefly (for more, see the reference), the principle of comparative advantage can be understood by first considering absolute advantage. A producer has an absolute advantage with respect to a given good if it is more efficent at producing that good than any other producer. A producer has a comparative advantage with respect to the good if it is more efficient at producing that good than it is at producing any other good. Thus every producer has a comparative advantage at something, although it perhaps is at an absolute disadvantage in everything. When considering comparative advantage, one must remember that value is determined by the consumer, so one cannot be efficient at producing a good that is worthless. Absolute advantage considers only a single good, in isolation, and thus need not take into account value to the consumer.

Not surprisingly, it turns out that the total economy is most productive when all producers (nations, industries, individuals, etc) produce what they are best at (i.e. produce maximum value with minimal use of available resources), and trade for other goods. In other words, total wealth is maximized when each producer produces those goods in which that producer has a comparative advantage. In a free market, the pressure on producers to shift to this state of affairs is provided by price.

A two-good model[edit]

The model in the article, however, tracks only the effect on a single good, for which the local economy is at a comparative disadvantage. If the good were at a comparative advantage, the price in the international marketplace would be higher than the price point in the local economy without trade. That is, trade creates price incentives that shift the local economy from areas of comparative disadvantage to areas of comparative advantage and that shift the world economy to buy, from the local economy, those goods that the local economy produces with comparative advantage.

The supply curve in the local industry has non-zero elasticity because there are other industries in the local economy that have competing demands for local resources. Since a local economy must necessarily, by definition, have some areas of comparative advantage, the reduction in access to resources at the lower price (and resulting reduction in quantity supplied) involves greater use of those resources in areas of greater comparative advantage. So the model could be improved significantly by considering an economy of two goods rather than one, at different comparative advantage. The new good (call it β) would be enhanced by trade and the other good (call it α) would be like the one in the model whose production would be diminished in the face of international trade.

Under the two-good model, trade improves prosperity by allowing resources to be used in the industry of greater comparative advantage. The tariff, on the other hand, protects the industry α, shifting resources to that industry and away from the competing, more productive, industry β. Whether the trade is limited by an import tariff or by other import restrictions, the price will still (in the example) rise and the areas under the curves will change in exactly the same way. The tariff (or other trade restriction), raises the demand curve for domestic goods α (by restricting access to the imported alternative), but at the same time it raises the supply curve for β (the supply curve for β rises because it needs to pay a higher price for those resources in which it competes with α--all suppliers are competing for the scarce economic resources of the nation). The increase in supplier surplus in α will thus come at a reduction to supplier surplus in β, however the increase in the consumer surplus in domestically produced α will be more than offset by the reduction in consumer surplus for imported α, and the reduction in the total consumer surplus in α will be joined by a reduction in consumer surplus in β. Thus the trade restriction will leave the nation poorer.

The article describes the weakness in the sentence "If new forms of production are not found in time, the nation will go bankrupt, and internal political pressures will lead to debt default, extreme tariffs, or worse." This sentence conveys the assumption in the article that alternate productive uses for the resources of the nation are not readily available, which seems to say that the nation is at a comparative disadvantage in everything, contrary to the definition of comparative advantage.

Competitive Pressure[edit]

The model assumes that the import problem arose because of a shift away from pre-existing barriers to trade, perhaps transportation has become cheaper or other import restrictions have been relaxed. Under that assumption the status quo ante was a price point at B (in the diagram), but foreign competition led to a shift in the demand for domestic goods in industry α, and a shift in the price point for those domestic goods to G.

However, tariffs are also proposed when imports arise for another reason. Generally, there has been a shift in the supply curve. Suppose that the nation has developed a new industry β, for which it has a comparative advantage, and which competes for resources with the good α that has been modeled. Before the innovation, the α supply curve would have been lower, as there were fewer alternatives competing for the resources involved. Perhaps the original supply curve achieved a price point at J, at a price of $50. But now, with the new industry, the supply curve has risen because the new industry β is competing for those resources, so that domestic production falls to G, and this is blamed on "cheap imports" that fill the gap between Y1 and Y2, and which keeps the factory from full production at the old wages. Workers are being laid off from industry α, and factories are closing (but, curiously, overall national employment doesn't drop and neither does GDP). In this scenario, even though imports are rapidly increasing as domestic production declines, the real competition for jobs in industry α is not foreign competition, but rather the homegrown development of the comparatively advantageous industry β.

During the development of industry β and the corresponding downsizing of domestic industry α, the reallocation of resources is likely not uniform. The supply curve for industry α corresponds to a set of demand curves for the resources used by industry α in production. When a factory in industry α closes, it doesn't retain all of the workers who have no alternative as good as staying employed at their old wage, and as the industry is downsizing, even along the horizontal line represented by the global supply curve, there will be downward pricing pressure on whichever suppliers have the least elasticity of supply (e.g. workers whose skills are specific to industry α.)

Economic pressure[edit]

The article states, "Moderate tariffs would slow down this process, allowing more time for new forms of production to be developed." Since the tariffs reduce overall prosperity, they cannot slow down any process of a nation's becoming bankrupt, but they would slow the shift in the economy from industry α to industry β, and the opportunity costs from that might be less visible than the disadvantages to those workers in industry α who were displaced with only less attractive available alternatives.

The statment about bankruptcy, however, seems to imply a mercantilist theory that a trade deficit is bad because money leaves the country. That argument for tariffs is widely in disrepute, both on the grounds of whether money does leave the nation and on the grounds of whether it is bad, but it is widespread and so it deserves some attention in the article. However, it should be considered in the article because the belief is widely held by people other than economists.

I think that the article has some merit in that it is certainly the case that some people, mainly specialists in industries of comparative disadvantage, are disadvantaged by trade and by the development of new industries of comparative advantage within the national economy. The article also makes a valid point about tariffs possibly being relatively easy taxes to collect. But the article does a disservice by suggesting that trade might make a nation poorer or create a disadvantage for a nation as a whole.Mazzula 19:36, 15 July 2007 (UTC)

Current status[edit]

What is the current average tariff for various countries and industries around the world? -- Beland (talk) 20:03, 15 October 2009 (UTC)

…Detailing on == Current status == 4:14 P.M. E.S.T. Is a Tax a Tariff. If so if everyone was Taxed with a formed tariff, would the said person in particular have a posible Boundery, Physical Entity, and a Political. Forming by word is structure or status byDavid George DeLancey (talk) 21:16, 6 November 2009 (UTC)

Illegible graph[edit]

Surplus with tariff-v2.svg

This is one of the worst images I've seen on Wikipedia. We see the words "price", "supply", "tariff", "demand", and "quantity demanded" stacked up vertically next to the vertical axis and a bunch of characters superimposed on each other so that you can't tell what they say. The words "quantity demanded" are at the intersection of the horizontal and vertical axes so that you can't tell which of the two axes they're supposed to label. The graph is illegible and incomprehensible. Michael Hardy (talk) 15:55, 16 December 2009 (UTC)

I agree. Moreover, the analysis does not explain the effect of the tariff. This video explains it well: [1]Knopffabrik (talk) 20:02, 18 October 2010 (UTC)jhjb
Thank you very much! I was about to complain about the same thing. Can someone (Michael Hardy or Knopffabrik) please tell me how to edit this image? Ratibgreat (talk) 05:01, 29 June 2011 (UTC)

I can't believe we have neoclassical economics up here. This field has been largely discredited - (talk) 02:01, 7 October 2011 (UTC)Lukeorama.

Arabic in the lead opening[edit]

Tariff is also a word in Hebrew refers for the same thing, if I'm not wrong, already used for at least two millennia. In any case, the source of the term is redundant in this article and contribute nothing to the content, it's not accepted in any of Wikipedia article to indicate foreign source of word or even name unless it have some clear contribution to the article itself. There in enormous quantity of article whose title, according to the logic of having Arabic in the lead, should include reference for a foreign name/term source-but they don't, because it's redundant. Also, there are no RS to prove that the term was derivative from Arabic directly and not from some other Semitic language. Please remove any reference to foreign source from the article-it help with nothing. -- (talk) 18:57, 13 October 2010 (UTC)

Its called Etymologi. If people want to include more info on it, I suggest we create a section called "Etymologi"

PS! Reason the arabic part has been included is because Italian states like Venezia and Florence were big trading partners of Middle Eastern nations and thus alot of Arabic words on trade were imported.

-- (talk) 09:24, 11 May 2012 (UTC)

An embarrassing and redundant article for such an important topic[edit]

I am interested to hear the rationale for the current state of this article by any of the users who have thus far contributed to it. From what I can tell the entire "History" section of this article is pulled word for word from another article "Tariffs in United States History," and furthermore lacks any citation whatsoever. This is especially disconcerting as the contributors make statements on the purposes of, and effects of these tariff without providing any citation to peer reviewed academic research of any kind.

Furthermore, the obvious bulk of this article, beyond the aforementioned cut-and-paste section relies upon the use of technical definitions of types of tariffs, their uses throughout history, their pros and cons, and a seemingly very impressive economic analysis. The problem is of course that all of these sections once again have been published without a single citation to any academic research, or private or public studies. I am interested to know who the unnamed scholar that created these sections is and what type of credentials he/she may have to make these analyses and statements.

This leaves the contributors of this article in the embarrassing situation of being accomplice to creating an article which cites a total of 7 references, while an article on the Horse has 55 citations in the same amount of words.

I would argue that any discussion of the history, politics, and impacts of a tariff would deserve if not demand more citation to actual research than that of a Horse article. As such, I have taken it upon myself to begin improving upon this article and I look forward to the assistance of any person willing to take on the task with me.ASEconomics (talk) 04:08, 14 July 2011 (UTC)

Who is going to pay customs duty?[edit]

Exporter or importer? (talk) 08:49, 19 July 2011 (UTC)

What's the difference between customs duty and custom duty?[edit]

Wikipedia direct customs duty to the page of tariff, while direct custom duty to the page of customs118.123.200.135 (talk) 08:51, 19 July 2011 (UTC)

How is a tariff a fee and not a tax?[edit]

According to Investopedia, it's a tax:

" Definition of 'Tariff' A tax imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers. They are one of several tools available to shape trade policy. "

Also according to The Free Dictionary:

" A tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue " — Preceding unsigned comment added by (talk) 22:39, 21 October 2012 (UTC)

Tariff (tax), Tariff (price schedule)[edit]

The current article talks about two different things: "A tariff is either (1) a tax on imports or exports (an international trade tariff), or (2) a list of prices for such things as rail service, bus routes, and electrical usage (electrical tariff, etc.)." This two meanings of the word tariff are quite different things and should have their own articles. Surprisingly, the disambiguation page lists them as different entries as if there would already be different articles for them. In other languages, they are also named by different words, e.g. German: (1) Zoll, (2) Tarif. Or Esperanto: (1) Dogano, (2) Tarifo. --Payton M. (talk) 13:21, 16 May 2013 (UTC)

Merger proposal for Duty[edit]

I propose that Duty (economics)#Customs duty be merged into this article. Not the entire article, but just the section dealing with tariffs. It can be replaced with a stub section roughly corresponding to the introduction/summary of this article. Int21h (talk) 01:43, 16 May 2014 (UTC)

I have done it. Int21h (talk) 19:53, 17 June 2014 (UTC)