Countries often put tariff as well as other non-tariff related barriers to protect their own domestic industry so that precious resources are not exported out of the host country and domestic industries are made to suffer. In other cases imports will get impacted as the government does not want the country to be flooded with foreign goods and hurt domestic production as well as consumption. These barriers will affect the exporter and the importer and since they are often announced suddenly, you as an importer or as an exporter should be aware of such risks and build it into your business model.
Governments are under constant pressure to reach and maintain their GDP growth as well as contain the fiscal deficit and have to necessarily take steps through regulation of import export data in order to meet those targets. The economic targets are the government's responsibility and it is up to them to provide all necessary help through policy decisions to exporters and importers so that they remain competitive in world trade.
As mentioned above, import export data helps government to come out with policy decisions that will:
? Enhance domestic consumption and production
? Accord more employment to local population
? Help improve the revenues to the government and help them meet economic targets
? Boost exports and reduce imports so that fiscal deficit is within control
However, these regulations and policies will have some effect on your business as an importer or exporter depending upon the items you import and export. You will therefore need to be aware of the implications of such moves from the government and also be aware of the benefits or drawbacks these tariff and non-tariff barriers would have on your business.
Let us understand tariff barriers in detail.
Tariff barriers
This is a tax imposed by the government on some of the items that are imported into the country. It is normally collected when the consignment lands at the ports. This is done to prevent excessive imports of particular items that would have an impact on local production and consumption. Though many economists have not welcomed it saying it will stoke inflation and the higher prices will ultimately have to borne by the consumers, the government sometimes imposes these duties in the larger interest of the industries making those items locally. The economists also feel that such policies encourage low performing industries and offer them protection.
From the exporter's point of view, exporting to a country with such tariffs reduces their competitive edge as though they might have priced their goods lower than competition, due to the taxes levied in the landing country; the products become expensive and may not get the response or support they anticipate.
