Economics Assignment: Tariff Analysis and Bangladesh Trade Relations

This economics assignment analyzes the impact of tariffs, specifically focusing on the trade relationship between Australia and Bangladesh. The assignment highlights how tariffs imposed by Australia on textile products from Bangladesh increase costs, potentially leading to a reduction in Bangladesh's exports, a decrease in aggregate demand, and economic downturn. The assignment also discusses how tariffs can lead to excess supply in Bangladesh's market, resulting in welfare losses. The solution recommends that Australia eliminate tariffs to benefit both economies. It suggests that tariffs could also reduce the overall price of textiles in Australia and increase production costs. The assignment references relevant academic sources to support its arguments and conclusions, providing a comprehensive analysis of the economic effects of tariffs on international trade.

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ECONOMICS ASSIGNMENT

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Tariff is a tax or duty payable to the government for any kinds of import from the other
countries of the world. This makes the products from the source country costlier than the
products from the domestic market. This tool is mainly used by the government to protect the
domestic sellers.
Australia imposes tariff on textiles products exported from Bangladesh. Therefore, the
welfare in the economy of Bangladesh reduces. This is due to the fact that, exporting
products from the economy of Bangladesh becomes costlier due to the imposition of tariff.
Therefore, excess supply of textiles appears in the market of Bangladesh leading to a welfare
loss (Alston, 2019). Apart from that the economy of Bangladesh may also experience a
reduction in the aggregate demand that in turn can lead to economic down turn in
Bangladesh. The domestic demand for textiles will not be able to absorb all the surplus of the
market leading to huge increase in the inventory.
Therefore, it is recommended to Australia to eliminate the tariff on the textile products
exported from Bangladesh. It is recommended not only for the interest of the Bangladeshi
economy but also for the interest of the Australian economy as well (Ukkusuri et al. 2016).
The imposition of tariff would also reduce the overall price of textiles in Australia leading to
a shrink in the demand and hence reduction in the size of the industry in Australia. The cost
of production can also rise in Australia due to the imposition of tariff. Therefore, it will be
mutually beneficial if Australia eliminates the tariff on the textile products exported from
Bangladesh.

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Reference
Alston, M. (2019). Gender, Politics, and Water in Australia and Bangladesh. People and
Climate Change: Vulnerability, Adaptation, and Social Justice, 165.
Ukkusuri, S. V., Mesa-Arango, R., Narayanan, B., Sadri, A. M., & Qian, X.
(2016). Evolution of the Commonwealth Trade Network: Hubs, Criticality and Global
Value Chains (No. 2016/07). International Trade Working Paper, 331-334.