TARIFFS

BY- SHANTANU MISHRA

GAURAV GUPTA
SALIL BATRA
ABHIJEET PANDE
RACHIT VARSHNEY
Types of Tariffs

 Specific tariffs
 Ad Valorem tariffs
 Licenses
 Import quotas
 Voluntary export restraints
 Local content requirements
 Specific Tariffs
A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This tariff
can vary according to the type of good imported.

 Ad Valorem Tariffs
The phrase ad valorem is Latin for "according to value," and this type of tariff is levied on a
good based on a percentage of that good's value.

 Licenses
A license is granted to a business by the government and allows the business to import a
certain type of good into the country.
 Import Quotas
An import quota is a restriction placed on the amount of a particular good that can be imported.
This sort of barrier is often associated with the issuance of licenses.

 Voluntary Export Restraints (VER)

This type of trade barrier is "voluntary" in that it is created by the exporting country rather than
the importing one. A voluntary export restraint is usually levied at the behest of the importing
country and could be accompanied by a reciprocal VER.

 Local Content Requirement

Instead of placing a quota on the number of goods that can be imported, the government can
require that a certain percentage of a good be made domestically. The restriction can be a
percentage of the good itself or a percentage of the value of the good.
 TRADE WAR INCEPTION

 Ongoing trade war initiated by US President Donald Trump between the People’s Republic

of China and the United States of America characterized by increasing tariffs and other
measures since 2018

 The basis for the dispute lies with the US President Donald Trump wanting to “Make
America Great Again”.

 He wants to bring more production back into the country in order to protect US jobs, as he
believes such past agreements have been a "rip-off" for the US.
 Chinese Premier Xi Jinping has also said he does not want to be seen backing down, with
both leaders seeing the honor of their nation at stake.
 Trump then declared a national emergency over threats against US technology – paving
the way for a ban on Chinese firm Huawei.
Chronology of trade war events

 March 22, 2018. Tariffs on $50-60 billion worth of Chinese goods-

aircraft parts, batteries, TVs.
 April 2, 2018. china responded by imposing tariffs on 128 products-
aluminum, air planes, cars and soybeans(25% tariff).
 June 15, 2018. United states declares that they would impose 10% tariff
on another $200 billion worth of Chinese imports, if china retaliated
against the U.S tariff.
 September 17, 2018. The US announced its 10% tariff on $200 billion
worth of Chinese goods would begin on Sept 24, 2018. increasing it to
25% by year end.
Chronology of trade war events(cont’d)

 So far china has imposed or proposed tariffs on $110 billion of U.S goods
 June 1, 2019. china says it will raise tariffs on $60 billion worth of U.S goods.
 August 1, 2019. trump announced on twitter that additional tariff will be levied on the
remaining $ 300 billion of goods.
 August 5, 2019. the Chinese central bank lets Renminbi fall over 2% in three days to
lowest point since 2008.
 August 23, 2019. Trump tweeted that he ordered American companies to
“immediately start looking for an alternative to china”.
Effects

 Number of industries in U.S showing employment growth while other

were planning on layoffs.
 Despite US imposed tariffs, in 2018 china’s annual trade surplus was $
323.32 billion a record high.
 IMF lowered the global economic growth forecast for 2019 from 3.6% to
3.3%, said trade friction may further curb global economic growth.
 The stock market initially rallied due to positive jobs report
 On Aug 14, 2019 the Dow dropped 800 points, partly caused by
increasing trade tension between U.S and China.
Winners

 Soybean exporters- china is the world’s largest soybean buyer,

importing around 60% of the traded crop.
 Due to high tariffs on Soybeans from US, the nation would likely turn to
other markets such as South America
 Pork & Plane suppliers- US is a big exporter of Meat. With Chinese tariffs
in play the country will likely turn towards European markets
 China might turn towards European aircraft manufacturers such as
Airbus instead of boeing
Winners (cont’d)

 Vietnam is by far the largest beneficiary, gaining 7.9% of GDP from

trade diversion.
 Other economies on the list of winners are Hong Kong, Mexico and
Canada.
THANK YOU