NationStates Jolt Archive

Economic/Trade Deficit question

20-12-2005, 19:18
Both irl and in-game, would import taxes/tariffs/protectionism increase or decrease a trade deficit?
20-12-2005, 20:21
Well sometimes it is not so simple, you would think higher tarrifs meant more money, and sometimes it does but usually most products you do not want to go without and only when you are "protecting" your home grown makers do you use tarrifs. Tarrifs are usually just a political signal, for instance, if one countries products they are selling edges out your products to much you will raise tarrifs to block out the imports and sometimes cause hurt if your country is their main importer which then would make them backtract or cause a war. While in other cases if you lower tarrifs then the country would trade more with you and even though your lower tarrifs by .5% the imports may raise by 1% or more.

So really only use tarrifs on goods that your own economy makes and lower it when you country imports alot (or maybe to much and raise them). So it all depends if you are a big country or small, if you are big you can push people around with tarrifs, "I do not care if you do not like my trading practices, who are you going to trade with other than me!. If you are small then lower so that everyone can import anything with only small taxes so that many countries see you as a good area.
21-12-2005, 02:19
Ok, thanks for the info.
21-12-2005, 20:27
Your welcome (even if it doesn't make much sense).