Global trade includes the exchange of products between different countries around the world. The process plays a critical role in the economic field of all governments, as the international export and import of products directly affect the national gross domestic product. One of the leading export systems includes transactions between Vietnam and the US1.The main impact of the exports of electronic equipment, furniture, machinery, and other products leads to the Vietnamese economy’s significant economic growth, allowing for more exporting products to be made2. Consequently, the net exports increases in a positive correlation with an increased number of transactions. On the other hand, the US ships a lot of its national products to Canada, including 18% of overall products3. Free trade with the US allows to eliminate tariffs and, in that way, improve Canadian competitiveness and increase exporting value.
Tariffs are, essentially, taxes imposed by the government on imported or exported products, paid by the citizens of the importing government. The primary purpose of a tariff is to ensure the protection of domestic industries while limiting the availability and number of imported products4. The high prices of such products decrease the number of customers or purchasers, and instead redirect them to more standardized domestic product prices. In that way, the impact of tariffs on international trade is expressed by a decreased level of exchange productivity and national gain from such exchanges4. Since the taxes are paid by the citizens of the importing country, it becomes disadvantageous for them to support international trade. From this perspective, imposing tariffs can be viewed as a negative factor in developing global exchange while allowing each country to focus on its domestic economy. Overall, the question of tariffs and their impact on economic relations is highly dependent on specific cases of developing or developed countries and their rates of export.
Footnotes
1According to Tu, M. T. C., & Giang, H. T. T. (2018). Estimating the impact of trade cost on export: A case study vietnam. The Journal of Asian Finance, Economics and Business, 5(3), 43-50. Web.
2According to Nguyen, H. H. (2020). Impact of foreign direct investment and international trade on economic growth: Empirical study in Vietnam. The Journal of Asian Finance, Economics and Business, 7(3), 323-331.
3Additional data is presented by Yatsenko, O., Nitsenko, V., Tananaiko, T., Szetela, B., and Kobylianska, A. (2019). Trade and economic integration dominants in North America countries’ interaction. Journal of International Studies, 12(3), 277-293. Web.
4The full article by Furceri, D., Hannan, S. A., Ostry, J. D., & Rose, A. K. (2018). Macroeconomic consequences of tariffs. IMF Working Papers, 19(9). Web.