A Comparative Analysis of Tariffs and Their Impact on Global Trade

This discussion post analyzes the impact of tariffs on global trade, focusing on the effects of tariffs on both developed and developing countries. The post highlights the negative impacts of tariffs, referencing the US-China trade war as a case study where increasing tariffs have led to slower economic growth and disrupted global supply chains. The post also examines how tariffs impact countries beyond those directly involved, such as Australia, which has experienced reduced steel manufacturing capacity and demand for iron ore due to the tariffs. The author argues that lowering tariffs enhances the efficiency of the global supply chain. The post cites references from Forbes and The Guardian to support its arguments.

Reply to “Select a developed country that has implemented a tariff, and a developing
country that manufactures products that are impacted by that same tariff.” (STUDENT
POST)
I am in complete agreement with regards to the gains that all countries realise on account of
reduction in tariffs and non-tariff barriers. This is clearly the basis for the Most Favoured
Nation status and also one of the key objectives of WTO. The adverse impacts of tariffs is
clearly visible in the ongoing US China trade war where increasing tariffs on both the sides
has been unproductive and is leading to slower economic growth. It is breeding inefficiency
as it encourages protectionism in the name of nationalism as is apparent from the rhetoric
used by President Trump. Meanwhile, the incidence of tariffs tends to disrupt the global
supply chains as companies such as Apple are learning the hard way (Team, 2018)
Further, in the globalised context, the effects of tariffs are not limited to only the country on
which the tariff is levied but has widespread impact. This is apparent from the example of US
China tariffs where the tariff is levied on China but it has impacted other countries
particularly Australia. Owing to the tariffs there is a slowdown in the growth and also there is
reduction of steel manufacturing capacity. This is having an adverse impact on the demand
for iron ore which is impacting the Australian mining companies (Ferrer, 2019). Hence, it is
correct to conclude that lowering tariffs tends to enhance efficiency of the global supply
chain.
References
Team, T. (2018) How A Trade War With China Would Impact Apple's Valuation: An
Interactive Analysis, Retrieved from
https://www.forbes.com/sites/greatspeculations/2018/09/11/how-a-trade-war-with-
china-would-impact-apples-valuation-an-interactive-analysis/#7d38940365c2
Farrer,M. (2019), ‘Wrong place at the wrong time’: how the US-China trade war is putting
the squeeze on Australia, Retrieved from
https://www.theguardian.com/business/2019/sep/21/wrong-place-at-the-wrong-time-
how-the-us-china-trade-war-is-putting-the-squeeze-on-australia