Every country has the right to set tax rates, according to the WTO. They are free to set the rates to meet their own economic needs, and to apply taxes to a wide range of goods. However, countries cannot use tariffs as a protectionist tool, to shield domestic industries from foreign competition. Tariffs should not be used to discriminate against imports, nor should they be used as a form of retaliation against trade actions taken by other countries.
One example of an illegal tariff is the United States-Mexico Border Tax. This is an example of a discriminatory tariff, and it was imposed to limit Mexican exports to the United States, and to protect American producers. It was declared illegal by the WTO, and the United States was found to be in breach of the General Agreement on Tariffs and Trade (GATT).
The purpose of tariffs is to increase a country’s revenue, not to protect domestic businesses from foreign competition. Tariffs have the potential to put local businesses at a disadvantage, and to make it harder for them to compete in the global marketplace. Tariffs should also not be used as a retaliatory measure against another country. Any country found in violation of the WTO’s rules will be subject to trade sanctions, and could face economic retaliation from other countries.
In addition, there are important economic considerations for countries that impose tariffs. Tariffs can hamper the free flow of goods and services between countries, which can lead to higher prices, decreased competition, and a reduction in global trade and investment. This, in turn, can hurt the economy and lead to job losses.
Tariffs also have the potential to negatively impact low-income countries, which rely heavily on exports. Increased tariffs can reduce their exports, and increase the cost of goods they need to import.
Overall, it is important to note that tariffs are a viable tool to raise revenues, but they should not be used to create protectionist policies or in retaliatory measures against other countries. Tariffs should be used in a way that benefits the economy and that helps to reduce global inequality.
In conclusion, countries are free to set tariffs in order to raise revenues and meet their economic needs, but those tariffs should not be used as a protectionist tool. Tariffs should not be used to discriminate against imports, nor should they be used as a form of retaliation against other countries. Tariffs also have economic implications for countries, and can be damaging to low-income countries. For these reasons, tariffs should be used judiciously.
