What is Tariffs / Trade Barriers?
Historical Background
Key Points
8 points- 1.
Import Tariffs: Taxes on goods entering a country, the most common type.
- 2.
Export Tariffs: Taxes on goods leaving a country, less common and often used to ensure domestic supply or raise revenue from specific resources.
- 3.
Specific Tariffs: A fixed charge per unit of imported good (e.g., $10 per barrel of oil).
- 4.
Ad Valorem Tariffs: A fixed percentage of the value of the imported good (e.g., 10% of the car's value).
- 5.
Compound Tariffs: A combination of specific and ad valorem tariffs.
- 6.
Objectives: Protect domestic industries, generate government revenue, correct trade imbalances, retaliate against unfair trade practices, or achieve geopolitical goals.
- 7.
Impacts: Increase prices for consumers, reduce import volumes, potentially lead to trade wars, disrupt global supply chains, and may foster inefficiency in protected domestic industries.
- 8.
Types of Trade Barriers: Include tariffs, quotas limits on the quantity of imports, subsidies, and non-tariff barriers (NTBs) such as regulations, standards, and licensing requirements.
Visual Insights
Tariffs & Trade Barriers: UPSC Perspective
This mind map illustrates the various aspects of tariffs and trade barriers, their types, objectives, impacts, and legal frameworks, crucial for understanding international trade and economic policy.
Tariffs / Trade Barriers
- ●Types of Tariffs
- ●Objectives
- ●Impacts
- ●Legal Framework
- ●Recent Trends
Evolution of Global Tariff Regimes and India's Context
This timeline traces key historical and recent developments in global tariff policies, highlighting the shift from protectionism to free trade and back to strategic use of tariffs, with India's role.
Tariffs have evolved from a primary revenue source and protectionist tool to a complex instrument of trade policy and geopolitical leverage. Post-WWII, global efforts focused on reducing tariffs through GATT and WTO to foster free trade. However, recent years have seen a resurgence of tariffs for strategic and protectionist reasons, exemplified by the US-China trade war and the current US pressure on India.
- 1930sGreat Depression & 'Beggar-thy-neighbour' policies (High Tariffs)
- 1947General Agreement on Tariffs and Trade (GATT) established - Aim to reduce tariffs
- 1995World Trade Organization (WTO) formed - Further tariff reduction & rule-based trade
- 2018US-China Trade War begins - Extensive use of tariffs as a geopolitical weapon
- 2020sIndia's 'Make in India' & Atmanirbhar Bharat - Strategic tariff adjustments
- 2023EU's Carbon Border Adjustment Mechanism (CBAM) implementation begins
- Jan 2026US Senator warns India of tariffs over Russian oil imports
Recent Developments
5 developmentsThe US-China trade war (starting 2018) involved significant tariff impositions by both nations.
Increased use of tariffs as a geopolitical tool and for national security considerations.
Focus on supply chain resilience has led some countries to consider tariffs to promote domestic production and reduce reliance on specific foreign suppliers.
Debates around carbon border adjustment mechanisms (CBAMs) as a new form of tariff linked to environmental goals.
India's 'Atmanirbhar Bharat (Self-Reliant India)' initiative includes measures to promote domestic manufacturing, sometimes involving higher import duties.