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Supply And Demand And Import Taxes
 We all know that supply and demand plays a big role in the economy of a nation. If the supply is scarce and the demand is high, the price of a particular item, product or service increases. However, if the demand is low and there is ample supply, the price will automatically reduce.More...
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The Problem With Import Taxes
| Import taxes are imposed by different countries on products or goods coming into the country. Primarily this tax is collected by the Customs and Excise Department and it is decided by the federal government. However, many nations, including the US, have restrictive import taxes. |
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There is no doubt that there is a problem when it comes to import taxes. Usually countries have trade treaties with one another and the import taxes are based on these treaties. This can have serious repercussions on the prices of goods. For example, if the country has a trade treaty with Denmark, then the products like processed ham and other food items coming from Denmark may be cheaper than similar products coming from another country. All this happens because the import taxes on products coming from Denmark might be much lower than the taxes imposed on another country.
This is one aspect of the problem with import taxes. The other aspect is within the domestic market. If a small business buys its raw material from a country who does not have a trade treaty with the US, that small business will be paying higher import taxes. This means that the operational costs of the business will increase. To cope with increase costs, the business will be forced to layoff employees, which affects the economy of the nation as unemployment would increase. Then there is other side where import taxes make businesses more competitive than domestic businesses as they get special incentives for importing from a preferred country. These incentives allow the business to produces and sell goods or items at a lower price than domestic businesses.
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