When we talk about global trade, business deals, ships, and ports aren’t exactly elements that can fully define it. Rather, there exists an invisible thread, connecting everything you use, starting from your favorite white sneakers to the iced cold latte you sip every morning before hitting gym. Every country has both import and export routes via which they exchange goods and fuel the economies, create job opportunities, and shape the cost structures of everyday items.
While the scenario seems lucrative, trade can become a tense factor and tariffs imposed on goods can flip the entire table, and not in a good way. Although trade wars and tariffs impact everyone, students need to become more aware and conscious. After all, these don’t just hit the news headlines but transform the very way you live every day. From recession in the job market to economic inflation in the commodity market, the end results aren’t beneficial at all. That being said, we have drafted an illustrative guide on tariffs and trade wars students must know in today’s economic world.
What is a tariff?
Consider it as a government-imposed tax on goods and commodities exported out of the country or imported into. At the core, it protects the local industries, helps generate more revenues, and control the trade routes accordingly. Let’s consider a smart phone being imported to India from the US. If the Indian government adds more taxes on it, the market price will automatically increase once it’s released for sales. Similarly, goods that are exported, like jute from India, are often taxed to maintain revenue channel for the country.
Types of tariffs
As you now know what is tariff, let’s get some more depth into it by learning the types.
Import tariff
Just as the name implies, these taxes are imposed on goods that are imported into a country. Laptops purchased from Japan will be taxed once they arrive in India. Higher the tariff, more expensive these gadgets will become to purchase.
Export tariff
Contrary to the import taxes, export tariffs are levied on goods being sent out of the country. The add-on overheads are usually imposed to control the exports and ensure consistent local supplies. For instance, the Indian government adds tariffs on steel exports so that domestic prices could remain stable and won’t get affected from inflation.
Special tariff
These taxes are imposed only on specific goods or industries. Take examples of the tariffs added on solar panels exported to another country to support the local manufacturers.
Impact of tariffs
While trade wars and tariffs sound entirely like concerns associated with the government, these impact everyone— from large corporations and businesses to everyday consumers. Here’s how.
- Imported goods become way more expensive due to the taxes levied on them, which is why everyone, including students need to pay extra for the favorite clothes or gadgets.
- With fewer affordable options for imported commodities, customers have limited scope to access foreign goods.
- Companies relying greatly on imported materials encounter increased costs, which often leads to job cuts or slower growth.
Tariffs play a crucial role in protecting the local industries. However, these can also trigger trade wars— situations where countries retaliate with more taxes, thereby impacting the entire global economy and job market.
What is a trade war?
Consider a trade war as kids trading punches over their lunch money. The only difference here is that billions are put at stake. It’s a critical situation on the global stage where countries impose trade barriers through increased tariffs against each other. An economic battle begins where nations continue to outdo one another, often leading to disrupted supply chains, inflations, and strained international relationships.
Causes of trade war
The moment countries consider it isn’t a fair battle, trade wars and tariffs enter the scene as the most strategic move to have the ball in one’s court. Governments begin rolling up their sleeves and reach out for taxes on imports and exports as a powerful weapon to counterattack the situation.
Below are some of the prime causes that lead to trade wars.
- Nations often impose high tariffs to shield their domestic industries from cheaper foreign competition.
- Sometimes, tariffs become the best tool for exercising a diplomatic move. Take US-China trade tensions as the example. These have transcended being economical to political given how the recent situations unfolded.
- Currency manipulation or selling of goods at prices much lower than the market standards can also trigger trade wars between international partners.
Summarizing, we can say that trade wars and tariffs are no longer about balancing economics— they become the best weapon of choice to maintain power, pride, and politics.
Effects on economy and students
Just like dominoes tip in a slow motion, trade wars too create a rippling effect through economies— messy and completely dramatic. Their effects extend to everyone, including students. Here’s how.
- Tariffs imposed on both import and export commodities disrupt the supply chains, reduce global trade rooms, raise the costs, and lead to decelerated growth.
- Everyday goods— from mobile phones to clothes— become pricier and inaccessible for all economic classes.
- Industries hit by the tariffs begin cutting down jobs or freeze hiring to maintain economical stability. Hence, career plans for students take the maximum blow, becoming more uncertain with time.
Real-life examples
To understand the hidden connection between trade wars and tariffs let’s consider a real-time case study. For this, no other situation will be as apt as the US-China trade tension, which began since 2018. Back then, the US accused China of unfair trade practices and intellectual property theft. These situations triggered both nations to impose billions in tariffs on each other’s commodities.
Below is a brief overview.
- Trigger: US’s concerns over China’s technology policies and trade surplus.
- What happened: Tariffs were imposed on multifarious items, including electronics, agricultural products, and steel.
- Outcome: Global markets became excessively volatile, supply chains witnessed major disruptions, and prices suffered from global inflations.
For students, the situation unraveled how international policies and trade wars can affect local prices, career opportunities, and accessibility to everyday commodity.
How students can learn from tariffs and trade wars?
Understanding trade wars and tariffs won’t just help students with grabbing the economical landscape with accuracy but also prepare them to live and work in any part of the world. The best sources from where they can gain valuable insights about what’s transpiring internationally are:
- Reliable news outlets for economic trends and trade updates
- Explainer videos or documentaries to visualize and understand the working principles of the global trade market
- Blogs and articles that simplify complex topics, like trade policies and varying tariffs
Awareness of such issues allow students to make smarter financial choices, whether it’s budgeting the imports or choosing an international career path. To top it off, it also helps build adaptability— a key skill every student selecting a profession impacted by global trades should hone.
Conclusion
Both trade wars and tariffs shape how different global participants do business. Understanding the key forces behind these will help students grasp the bigger picture of the international economical realm, thereby feeling empowered to make smart, future-proof financial decisions.
Understanding global economic dynamics is crucial for students today. To explore more educational resources and stay updated with school events, visit our school website.
FAQs
What is a tariff and how does it work?
A tariff can be considered government-imposed tax on export or import items with the primary goal of generating revenue and protecting local industries.
What is a trade war, and why does it happen?
A trade war is best described as an economical and political situation where countries continue to retaliate against one another through heavy taxes on import and export channels.
How do tariffs and trade wars affect students?
Both the trade wars and tariffs increase the market costs of regular commodities, limit job opportunities, and influence the overall economy. As a result, students soon encounter an unstable situation where financial management and career building become uncertain.
Can trade wars impact everyday prices and goods?
Yes, trade wars between nations do impact the prices of everyday goods, thereby disrupting the international economical balance.
Why should students understand global trade issues?
As students now live in a connected world, understanding trade issues will help them make smarter financial choices and choose the best profession with minimal uncertainty.
