Tariff and Trade Barriers

What are the effects of tariff in the Philippine economy?

The tax imposed on the imported goods that enter the country makes the foreign goods less attractive to the consumers and prevents them to compete with domestic products. It is more expensive compare to others and as the price is one of the factors that affect consumers’ preference, it is expected to change how the consumers perceive the product. Thus, as the price for the product increases the demand for a certain product will also decrease as consumers will need to pay more than what they are capable of paying for. Moreover, there’s a high tendency for consumers to choose definitely the lower-priced products as this will be probably within their capacity to pay for. Therefore, due to these trade barriers, domestic producers are not forced to reduce their prices from increased competition, however, domestic consumers are left paying higher prices as a result.    

Economists generally agree that trade barriers are disadvantageous to a  country and decrease overall economic efficiency. Do you agree or disagree?

 Agree. Trade barriers have been demonstrated to cause more economic harm than benefits.  When a country imposes trade barriers, it’s either for the betterment or loss in exchange for something. Moreover, its restrictions to import will lead to higher-priced of goods for consumers as there will be fewer options to be offered and competition between other countries will be reduced as well as lowers the demand for a certain product. In addition, as there are no other emerging markets within the country, there will be no pressure for countries to innovate and improve their products as they have no other competitors than them themselves. These trade barriers protect domestic products to be more competitive than imported products and make the latter less attractive to the consumers and reduce foreign competition. However, those benefits that the country is getting seem to be in favor of them than to its consumers. The supposed to be protection seems to have an anomaly on the process and thus the solutions they choose for the problems are only for the short run and do not benefit the consumers or workers but hurt them instead. Therefore, in a worst-case scenario, these barriers to trade are used for personal advantage and only breed corruption.