Trade and tariffs

1. Trade and tariffs  By Richard Orabuena, Felipe Ochoa, & Leticia Patino

2. Trade: • Trade also called goods exchange economy is the transfer of ownership of goods from one person or entity to another by getting something in exchange from the buyer. • Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money

3. Tariffs: • A tariff is ethier a tax on imports or exports.  • The affects of tariffs are heavy on trade not only becuase of imports but also because of past history. In january 1929, many memebers of congress became disturbed over the increase in imports into the united states. So they passed the Smooth-Hawley Tariff Act, which proposed tarriffs and the increase of tariffs on any imported good. • Tariffs sole purpose is to provide an extra tax to any good coming into the country to prevent from disadvantaging the competition of low prices from outside the country.

4. How they affect The price of goods: • Tariffs increase the prices of imported goods. Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result. Tariffs also reduce efficiencies by allowing companies that would not exist in a more competitive market to remain open. • The role tariffs play in international trade has declined in modern times. One of the primary reasons for the decline is the introduction of international organizations designed to improve free trade, such as the World Trade Organization (WTO). Such organizations make it more difficult for a country to levy tariffs and taxes on imported goods, and can reduce the likelihood of retaliatory taxes. Because of this, countries have shifted to non-tariff barriers, such as quotas and export restraints. Organizations like the WTO attempt to reduce production and consumption distortions created by tariffs. These distortions are the result of domestic producers making goods due to inflated prices, and consumers purchasing fewer goods because prices have increased.

5. History of Tariffs: • Tariffs in United States history have played important roles in trade policy, political debates and the nation's economic history. The first united congress , wanting a straightforward tax that was not too onerous and easy to collect, passed the Tariff of 1790. Like all subsequent tariffs it taxed imported goods at their Ports of entry to raise revenue for the federal government. Treasury agents collected the tariff before goods could be landed, and what became the Coast Guard prevented smuggling. Tariffs were the largest (approaching 95% at times) source of federal revenue until the Federal income tax began after 1913. For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports. There are no tariffs for imports or shipments from other states. Since the 1940s foreign trade policies have focused more on reciprocal tariffs and low tariff rates rather than using tariffs as a significant source of Federal tax revenue. The goal of using higher tariffs to promote industrialization was urged by the first Secretary of the Treasury, Alexander Hamilton, and after him the Whig Party. They generally failed because Jeffersonian and Jacksonian Democrats said the tariff should be only high enough to pay the government's bills. The Republicans, however, made high tariffs the centerpiece of their economic policy beginning in 1861, and as late as 1930. Since 1930 tariffs have not been a major political issue.

6. Pros of tariffs: • You get to keep jobs inside your country and to United States citizens instead of off-shoring just to keep labor wages down. • Also instead of decreasing the jobs, it will increase labor demand for the common citizen thus increase overall nation jobs. • And will also add new jobs that have never appeared before like technology and construction etc. to the labor market. • Finally will keep revenue circulating through the economy and decrease the nations deficet and minimize expenses on welfare and unemployment. as well as increased income to the goverment

7. Cons oF TARIFFS: • Customers might actually spend more money for a tariffed  item rather then one that isnt. • Other countries might retaliate and tariff your goods as well so continues the endless cycle of increased tariffs on both imports and exports. • Local buissneses and organizations might see the tariffs as an excuse to maximize prices so they can maximize all profits. • Local companies dont have to necessarily make a product that works just because the high tariffs on other items make thiers already cheap. Also to improve it also fits the same boat as well

8. Conclusion: • In conclusion, tariffs can be both bad and good, it is up to the goverment or even us to decide which is better for our specific time. Our economy changes almost every year not only because of deficets but also on trade, and on this trade is the tariffs.  • We need to band together, as a nation and fix all our kinks and problems in our system today becuase clearly it hasnt changed for the better. Time are changing and technology is increasing, maybe its time for a step foward and re-write some laws and lower tariffs but not so much that it affects us in a negative way but in a way that we can flourish without any consequences for the other party. So that we can all prosper not individually but as a race, as human beings.

9. Works Cited: • Category. "Tariffs - The Economic Effect of Tariffs." Economics at About.com. N.p., n.d. Web. 13 May 2013. <http://economics.about.com/cs/taxpolicy/a/tariffs.htm>. • "Tariff Definition | Investopedia."Investopedia - Educating the world about finance. N.p., n.d. Web. 13 May 2013. <http://www.investopedia.com/terms/t/tariff.asp>. • "The Basics Of Tariffs And Trade Barriers." Investopedia - Educating the world about finance. N.p., 18 June 2011. Web. 13 May 2013. <http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp>. • "WTO | Tariffs." World Trade Organization - Home page. N.p., n.d. Web. 13 May 2013. <http://www.wto.org/english/tratop_e/t