Xeco212Tariffs and Quotas

Tariffs and Quotas
Principles of Economics

Axia College XECO/212

    Tariffs are taxes that are placed on goods that are being transferred from one country to another. For the United States these taxes are collected by the government when another country wants to sell their products here. This is a great benefit to the United States because it not only gets money from the company wishing to sell here but also from the consumer when they purchase the product. The negative aspects of this are that some countries may boycott this tariff and decide not to allow their product to be sold here. Another is that because the company wishes to make a profit they will have to sell at a marked up price to the consumer to make up for the high tax they had to pay to sell their product here.
    Quotas are specific amounts of certain items that are allowed to be imported and sold in the United States. This is helpful in keeping the market from being flooded by specific items. There are several downsides of having quotas on items. One is that it limits the selection of products to consumers. It also can increase the price that must be paid for a product because of the exclusiveness of a limited number of suppliers. Quotas may also lead to corruption when deciding which companies will be selected or allowed to supply the product to the United States and which will not.  
    Between tariffs and quotas I believe that if tariffs are set to high it will cause a negative effect on the U.S. economy by cutting off imported goods. Tariffs are important and beneficial if set at a reasonable rate. Quotas do not seem as beneficial or necessary to me. They do not allow for fluctuations in demand for products where a tariff is not affected by the demand of product.