Why do tariffs exist?
The term tariff is derived from the Arabic word, taÃ„Ârif, which means fees to be paid. Tariffs are actually charged taxes particularly in the importation and exportation of goods and services and even people. Through the course of history, tariffs have been used as part of the trade industries, businesses and fields of commerce. As the use of tariffs became well incorporated in regulating the economies of most countries, it has been gradually developed and improved, that today, various types of tariffs are already in existence. There are ad valorem tariffs, Specific tariffs, Revenue tariffs, Prohibitive tariff, Protective tariff, Environmental tariff and Retaliatory tariff. These tariffs have various functions and scopes, depending on what situation it is required for.
Economical and political experts have different views in the use of tariffs. For the economists, they claim that tariffs cause massive distortions to the free market. Although it is beneficial to domestic producers and the government, it is at the expense of the consumers. Also, studies have shown that tariffs may be a great disadvantage to a country since it serves as barriers to the world markets. In the political view, tariffs have been useful in establishing an independent nation. In general terms, tariffs exist due to various reasons. Some tariffs are placed simply to earn money for the government. Businesses wishing to import or export goods have to pay the tariffs or else risk legal problems with that government. Other tariffs exist as a form of protectionism, which ensures that domestic industries generate profitable amounts, in terms of importing goods. Tariffs also exist with the goal of protecting consumers. A government may levy a tariff on products that it feels could endanger its population.
Today, the use of tariffs remains to exist, especially in establishing economies.