UNILATERAL TARIFFS IN INTERNATIONAL TRADE AND IMPACT ON GLOBAL ECONOMY

Abstract

Unilateral tariff is usually a higher dues imposed on imported goods by a country on another country. Usually, this is done without any prior discussion or agreement between the trading countries. Also, this tariff which is always higher than the pre-existing ones usually runs contrary to the trade agreement between the trading partners. When unilateral tariff is imposed it disorganizes the economy of the country on which it is imposed, which in most cases retaliates, thus resulting in trade wars. The spiral effect of this trade war normally robs off on other countries that are not directly involved and if allowed to persist leads to distortion of the global economy and so on. Therefore, unilateral tariff is not good as it affects several countries and sectors of the global economy, resulting in economic hardships on both sides. This arises because the cost of doing business increases, which is passed on to consumers in the form of higher prices on goods imported on one side and reduction of importation leading to loss of jobs and earnings on the other side. Accordingly, unilateral tariff should be stopped. If a country wants to increase her tariffs on imported goods it should abide by the rules and procedures agreed as laid down by the World Trade Organization. Alternatively, the countries concerned should meet and agree on the new tariffs bearing in mind that ultimately, they would still meet and agree when the trade war starts as a result of unilateral tariff from one side.