Understanding Tariffs and International Trade

The video explains the complexities of international trade, focusing on tariffs as a key element. It defines tariffs as taxes on imports, detailing two types: specific and ad valorem. Specific tariffs are fixed amounts per unit, while ad valorem tariffs are percentage-based. Tariffs can protect domestic industries, raise revenue, or retaliate against other countries, but they risk sparking trade wars.

What is a tariff in the context of international trade?

• A subsidy given to exporters

• A tax on imported goods

• A reward for domestic producers

• A discount on exported goods

How does a specific tariff differ from an ad valorem tariff?

• Both are a flat rate per unit.

• Both are based on the value of goods.

• Specific tariffs are a flat rate per unit, while ad valorem tariffs are based on the value of goods.

• Specific tariffs are based on the value of goods, while ad valorem tariffs are a flat rate.

What does 'ad valorem' mean in Latin?

• According to quantity

• According to value

• According to weight

• According to size

Why might a country implement tariffs?

• To increase exports

• To reduce government revenue

• To encourage foreign investment

• To protect domestic industries

What is a potential risk of using tariffs?

• Increased international cooperation

• Lower consumer prices

• Decreased domestic production

• The start of a trade war

Which of the following is NOT a reason for implementing tariffs?

• Protecting national security

• Raising government revenue

• Encouraging international trade

• Retaliating against another country