Tariffs and Trade Blocs Overview

The video tutorial discusses tariffs and trade blocs, starting with an explanation of tariffs as taxes on imports that affect international business pricing. An example is provided, illustrating how a UK business exporting to the US is impacted by a US-imposed tariff, leading to higher prices and reduced competitiveness. The tutorial then shifts to trade blocs, where countries collaborate to reduce or eliminate tariffs among themselves, offering a cost advantage to member countries. The impact of the UK joining a trade bloc is also discussed, highlighting the benefits of reduced tariffs for UK businesses.

What is the primary purpose of tariffs in international trade?

• To encourage imports

• To protect local industries and generate tax revenue

• To increase domestic competition

• To stabilize currency exchange rates

In the example provided, what was the initial price set by the UK business for the US market?

• $4

• $3

• $2

• $1

How does the imposition of a $2 tariff by the US government affect the price of UK products in the US market?

• It keeps the price at $2

• It eliminates the product from the market

• It increases the price to $3

• It reduces the price to $1

What is a trade bloc?

• A single country imposing tariffs on others

• A group of countries that reduce or eliminate tariffs among themselves

• A global organization regulating tariffs

• A group of countries that increase tariffs among themselves

What advantage do UK businesses gain by joining a trade bloc?

• Cost advantage over non-member countries

• Higher tariffs on exports

• Reduced domestic competition

• Increased import duties