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I'm reading Principles of Economics, the paragraph about tariffs in a imaginary country Isoland wrote: "The Isolandian economists next consider the effects of a tariff—a tax on imported goods. The economists quickly realize that a tariff on textiles will have no effect if Isoland becomes a textile exporter. If no one in Isoland is interested in importing textiles, a tax on textile imports is irrelevant. The tariff matters only if Isoland becomes a textile importer. Concentrating their attention on this case, the econo- mists compare welfare with and without the tariff." I don't understand why a tariff have no effect to an exporter.

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A distinction should be made between two different types of tariffs.

Let's define good imports as goods that enter into a country, across its border, for commercial purposes. Those imports could be subject to a tax on trade, called an import tariff. Thus, the Isoland country only taxes goods that enter. If no one imports the goods, this tax is irrelevant.

Let's define good exports as goods that move outward across a country's border for commercial purposes. Export tariffs would be a tax that a country imposes on its exports, which makes them more expensive. Isoland does not want to tax these goods because it would be a burden on its own businesses.

Note, however, that these export tariffs can be put in place to encourage domestic consumption of domestically produced goods instead of exports. This could be the case in the context of a food or health crisis if a country wants to discourage exports. This is not the cas in your example.

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A tariff is a tax on imported goods. If you export instead of import goods, a tax on imported goods is irrelevant for you.

You might have misunderstood who considers imposing the tariff. If the foreign country to which you export imposes a tariff, then you will of course be affected. But in the text it is Isoland that considers imposing the tariff.

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    $\begingroup$ While tariffs are more commonly imposed on imports, it's also fairly common usage to call a tax on exports a tariff: on googling "tariff on exports" (with the inverted commas) I obtained more than 100,000 hits. $\endgroup$ – Adam Bailey Apr 23 at 11:45
  • $\begingroup$ @AdamBailey, true, but in the present case the cited text clearly says that the tariff in question is a tax on imported goods. $\endgroup$ – VARulle Apr 23 at 12:01

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