International Trade
Global trade enables countries to extend their markets and get access to commodities and services that might otherwise be unavailable in their own country. Consumers are accustomed to seeing items from all over the world at their local grocery stores and retail outlets in today’s global economy. Consumers have additional options with these imported goods from other countries. Importing and exporting activities can have an impact on a country’s GDP, exchange rate, inflation, and interest rates.
International Trade Impact
A country’s net exports statistic is positive when exports surpass imports, indicating a trade surplus. The net exports figure is negative when exports are fewer than imports, indicating that the country has a trade imbalance. More exports indicate a high level of output from a country’s factories and industrial facilities and a larger number of workers employed to keep these businesses running (Heakal, 2021). When a company exports a large number of products, it also brings money into the country, stimulating consumer spending and contributing to economic growth.
When a country imports commodities, it causes a financial outflow from that country. Importers are local businesses that make payments to international companies, known as exporters. Imports at a high level reflect solid domestic demand and a developing economy (Heakal, 2021). Because there is a constant feedback loop between international commerce and how a country’s currency is valued, the link between a country’s imports and exports and its exchange rate is intricate.
Tariffs
A tariff is a kind of border tax imposed by a country on an imported product. Governments have long used tariffs to collect revenues, but governments also use them to safeguard domestic producers. A tariff raises the price of imports as a protectionist weapon. As a result, people would choose to buy household items since they are less expensive. As a result, tariffs can have an impact on consumers who assume their items were created in their original country. Tariffs cause market distortions that can affect domestic consumers in the long run (Heakal, 2021). They might also lead to the introduction of tit-for-tat taxes on each other’s exports, perhaps resulting in a devastating trade war. Taxes often have to be paid by buyers, as companies tend to inflate the price to transfer these costs to the end customer.
Reference
Heakal, R. (2021). What is international trade? Investopedia. Web.