Impact of Tariffs on Trade: U.S and India are trading with each other since years. Both has implemented the tariff on the products and services, which are given to each other. However, U.S is the developed country the tariff do
not affect the country but countries like India and China are affected by the U.S policies of paying the trading tariffs. India is the 18th largest export for the U.S good, the agriculture, and different products are exports to America. However, the majority of the tariff rates for India have increased between 50 and 150 percent. India is bounded by the tariff, Brazil paid 36%, and China paid 16% of the tariff rates to U.S (DIANE, 2009). For the agriculture product, the tariff rates are higher, however, the countries have to follow the global or international market conditions that can also affect the countries and the tariff rate changes can create uncertainties.
Through eliminating the tariff rate the developing countries, and their economies can be a boost, if the countries do not have to pay the tariff rate, they can able to create more products, in this way economies can be strengthened and get more benefits. However, the reduction of the tariff rate can increase the revenues for the countries, competing with the tariff rate can help the developing countries to grow and become equaling. Moreover, the potential governments may suffer loss, in this case, and there can be the loss in the revenues. There should be the free trade agreement, so the economies of the developing countries can grow; market structure and transportation system of the developing countries can be improved, if developed countries help them through reducing the tariff rates.
Reference
- DIANE. (2009). India: Effect of Tariff and Nontariff Measures on U.S. Agricultural Exports, Inv. 332-504. DIANE Publishing.