Impact of Trade Tariffs on Australian Goods: Advantages and Disadvantages

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
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Introduction
Tariffs are taxes that are set by the government for goods which are imported. This is the
small percentage of the total sum of the cost of the product that includes freights and insurances,
another term for tariff is customers or import fees. These fees can also be applied on exports in
certain rare cases. This report is regarding the recent announcement by Donald Trump that states
to impose trade tariffs on Australian goods. As per this announcement, there has been many
advantages and disadvantages when the policy gets implementing therefore this report has been
stated to the Australian prime minister in regards to the issue so avoid any kind of turbulence
related to the matter some measures are suggested in order to prevent an issue between United
States and Australia . The statement highlights the issue related to trade tariffs and the problems
and benefits associated with them (Kellenberg and Levinson 2016). The study further explains
the role of the supply chain of a company and how it impacts the trade tariff that is imposed by
the government. The common risks and the benefits are highlighted with which the Prime
minister of Australia will get an overview of the effects of trade tariff when it is brought into full
motion.
Background
As per a report in 2017, US President Donald Trump imposed multiple tariff on imported
good towards many countries. These include China, Germany and Australia. This remarks had
many investors in concern and this grappled with the impact of making the value of US dollars
stronger (Francois et al. 2015). Due to the effects of this measure, there were many chances in
both the countries, the one who implement the law and the country on which it is implemented
upon. The process of international trade increases the over quantity of goods which the domestic
consumer can select. Through the means of increased competition, this also lowers the overall

2INTERNATIONAL BUSINESS
cost of the goods which would allow domestic based industries to ship their products to abroad
countries. While these measures seem to be beneficial, however this method is not very
beneficial to all the parties involved. Due to Trump’s anti-trade campaign, his administration
brought forth billions of dollars added in new tariffs in imports. Australia has retaliated by
commencing with the tariffs on imported goods from U.S. This tariff was included on materials
such as steel and aluminum from the countries. Trump also announced a 25% tariff on goods that
is worth more than 15 billion (Beghin, Disdier and Marette 2015). With the levying of tariff that
makes it highly politicized. The probability of high competition from the source of imported
good can be problematic for domestic industries. The companies that usually shift production to
aboard so that the costs are cut down can indicate a higher rate of unemployment and an
electorate that is not well maintained. The argument related to domestic industries shifts to cheap
labor cost and unsatisfied working conditions (Cadot and Gourdon 2016). These methods are
applied so that the imported goods are made cheaply and the production would increase. The use
of tariffs can also be to save the new start-up industries that is used by many developing nations.
There are specific tariffs that are fixed levied on a particular unit of a good that is
imported. This can mean that a country can levy a cost of 10 dollars on a pair of imported jeans
but levy around 500 dollars on an imported computer (Zheng and Kammen 2014). The phase
“according to the value” also known as ad valorem is used in many cases for tariff levied on
good’s value in terms of a good based on a percentage. An example would be the tax levied on
automobiles. For example, if the value is 15% then there is situation where a 10,000$ car would
cost an amount of 11,500$ to the consumers (George 2017). This increase in the price would
therefore protect the producers of the country from being undercut and at the same time this
keeps the price relatively high. Due to tariffs there is a type of trade barrier known as Voluntary