Eco 372 Week 5 Individual International Trade and Finance Speech

971 Words Nov 22nd, 2012 4 Pages
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|The U.S. Macroeconomy State. |
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Tariffs have not only the purpose of protecting economies but also domestic employment, retaliation, consumers, and national security. Without tariffs the domestic market competition will force producers to reduce cost by firing employees, and transferring their production to countries with cheaper labor. However, tariffs also have its negative effect on international trade. The impose of tariffs make the cost of imports and exports more expensive, accumulating taxes to the total cost of this transaction. Many developing nations use tariff to restrict the imports of goods and services from other countries, if they believe it could be dangerous to the nation. In the same quotas limit the quantity of goods and services that foreign producers import to a country for a specify period. This is also a method of protecting employees, and domestic productions from the low prices of foreign products. Quotas can also affect consumers by increasing prices of foreign products, which will reduce the domestic market competition. As a consequence of the different trading transactions, trading countries are constantly buying and selling other countries currency. The foreign exchange market allows countries to trade their currency for such transactions, and it is the responsible of determing the value of each currency on a daily basis. The exchange rate is the he rate at which one

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