International Trade Debate The United States must place high tariffs and use quotas to restrict trade with foreign countries. A tariff is usually a tax that one country sets on the imported goods or services of another nation. A quota is a trade restriction set by a country to maintain and secure the country’s interests by limiting the amount of goods that can be imported into the country for a fixed time period.
The tariffs and quotas in the United States were established to control the amount of goods that enter into the United States to protect the United States interests economically while still maintaining the healthy trading relationship with other countries. The United States utilize these trade restrictions to decide which countries will be suitable. These trade tools are meant to guard the country’s economic interests and establish relations with particular nations.
Some critics of these trade tools argue that tariffs and quotas often lead to corruption, such as with smugglers seeking to escape tariffs and quotas and high prices for consumers as there is less competition between domestic and international goods, which tend to be less expensive. When the dollar is strong then the United States can lower tariff to benefit the consumers and further spur the spending. When the dollar is weak the United States needs to protect the vulnerable economy and potential jobs by increasing the tariff.
Domestic trading represents the most beneficial situation for domestic producers, as there is less competition and inflation of consumer goods becomes favorable but it is the least beneficial to domestic consumers, the world economy, as consumers will buy less due to inflated prices. Free international trade circulates world economies through broad trade between nations and spurs competition for goods and services between businesses which contributes to fair prices and better made products and encourages the consumer to spend more.