This document provides an overview of tariffs and international trade concepts. It defines tariffs as taxes on imported goods that make them more expensive for consumers. It then discusses key economic concepts related to international trade such as market price, consumer surplus, producer surplus, supply and demand curves. The document outlines different types of tariffs and non-tariff barriers. It also provides justifications for tariffs and discusses their analysis from both small and large economy perspectives. Finally, it briefly summarizes the role of the GATT and its replacement by the World Trade Organization.

1. TARIFF ANALYSIS
Presented by:-
Parth Pratim

2. BOSTON TEA PARTY
16 December , 1773

3. A tax imposed on
imported goods and
services. Tariffs are
used to restrict trade,
as they increase the
price of imported
goods and services,
making them more
expensive to
consumers.

4. WHY TRADE HAPPENS……………?

5. WE NEED TO KNOW……………..
MARKET PRICE
PRODUCER SURPLUS
CONSUMER SURPLUS

6. The current price at which an asset or service
can be bought or sold. Economic theory
contends that the market price converges at a
point where the forces of supply and demand
meet. Shocks to either the supply side or
demand side can cause the market price for a
good or service to be re-evaluated.
MARKET PRICE

7. CONSUMER’S SURPLUS:-
Consumers always like to feel like they are
getting a good deal on the goods and services
they buy and consumer surplus is simply an
economic measure of this satisfaction.

8. --::EXAMPLE::--
Assume a consumer goes out shopping for a
CD player and he or she is willing to spend $250.
When this individual finds that the player is
on sale for $150, economists would say that this
person has a consumer surplus of $100.

9. PRODUCER’S SURPLUS:-
An economic measure of the difference between
the amount that a producer of a good receives and
the minimum amount that he or she would be willing
to accept for the good. The difference, or surplus
amount, is the benefit that the producer receives for
selling the good in the market.

10. -::EXAMPLE::-
Say a producer is willing to sell 500 widgets at $5 apiece
and consumers are willing to purchase these widgets for $8
per widget.
If the producer sells all of the widgets to consumers for $8,
it will receive $4,000.
To calculate the producer surplus, you subtract the amount
the producer received by the amount it was willing to accept,
(in this case $2,500), and you find a producer surplus of
$1,500 ($4,000 - $2,500).

11. SUPPLY
DEMAND
PRICE
QUANTITY
CONSUMER’S
SURPLUS
PRODUCER’S
SURPLUS
GRAPHICAL REPRESENTATION :-

12. SUPPLY
DEMAND
PRICE
QUANTITY
WORLD PRICE
A B
CONSUMER’S
SURPLUS
EXPORT
LOCAL
SALE
TOTAL
SALE

13. SUPPLY
DEMAND
PRICE
QUANTITY
A B
CONSUMER’S
SURPLUS
WORLD PRICE
IMPORT
LLOCAL
PURCHASE
TOTAL
PURCHASE

14. SUPPLY
DEMAND
PRICE
QUANTITY
APPLICATION OF TARIFF:-
300
270
a b
X
Y
Z
import
World price

15. SUPPLY
DEMAND
PRICE
QUANTITY
APPLICATION OF TARIFF:-
300
290
270
a b
c d
IMPORT
WORLD
PRICE
+TARIFF
X
Y
Z

16. Tariff
Export Tariff Import Tariff Transit Tariff

17. Export Tariff :- Are the taxes that are levied
on goods when they leave the country.
Import Tariff:- Are the taxes on the goods
which are imported.
Transit Tariff:- Are the taxes which are imposed on
the goods as they pass through one country bound
for another.

18. Non tariff
“ Any government regulation, policy, or
procedure other than a tariff that has a
effect of restricting international trade or
effecting overseas investment
becomes a non tariff barrier.”

19. Non Tariff
Quotas Subsidies Embargo Currency
Controls
Local Content
Requirements
Product &
Testing
Standards

20.  Quotas refers to numerical limits on the quantity of goods that
may imported or exported by the country.
 A Subsidy is a government payment to a domestic producer.
Subsidies take several forms such as , cash grants , low-interests
rates, tax breaks, and government equity participation in local
firms. By lowering the costs, subsidies help domestic producers
in two ways:- they help them compete low-cost foreign imports
and gain access to export markets.
 EMBARGO refers to a complete ban on trade (import or export)
in one or more products with a particular country. It may be
placed on one or more goods or completely ban trade in all
goods. It is the most restrictive non-tariff trade barrier.(it can
also be termed as absolute quota)

21. Currency control:-
refers to restrictions on the convertibility of
currency into other currencies.
Local Content Requirements:-
refers to the legal stipulation that a specified amount
of a good or service be supplied by producers in a
domestic market.
PRODUCT & TESTING STANDARDS
This non-tariff barrier requires that foreign goods
meet a country’s domestic product or testing
standards before they can be offered for sale in
that country.

22. TARIFF ACCORDING TAXATION
Ad Valorem Tariff
Specific Tariff
Compound Tariff

23. JUSTIFICATION OF TARIFF
To protect domestic jobs. If consumers buy less-
expensive foreign goods, workers who produce
that good domestically might lose their jobs.
To protect infant industries. If a country wants to
develop its own industry producing a particular
good, it will use tariffs to make it more expensive
for consumers to purchase the foreign version of
that good. The hope is that they will buy the
domestic version instead and help that industry
grow. Contd….

24. To retaliate against a trading partner. If one
country doesn’t play by the trade rules both
countries previously agreed on, the country
that feels jilted might impose tariffs on its
partner’s goods as a punishment. The higher
price caused by the tariff should cause
purchases to fall.
To protect consumers. If a government
thinks a foreign good might be harmful, it
might implement a tariff to discourage
consumers from buying it.

25. Analysis of a tariff in a "small"
economy

27. General Equilibrium Analysis

29. Analysis of a tariff in a "large"
economy

31. Analysis of a quantitative
restriction-import
quota- in a small economy.

33. GATT & WTO
GATT stands for General Agreement on Tariffs
and Trade.
 GATT was signed in 1947, took effect in 1948,
and lasted until 1994 and it was replaced by
the World Trade Organization in 1995.
Its purpose was the "substantial reduction of
tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and
mutually advantageous basis.

34. WTO
 World trade organisation.
 GATT was a set of rules agreed upon by
nations while WTO is an institutional body.
 WTO acts as:
1. Conductor
2. Tribunal
3. Monitor
4. Trainer

35. Case Study
Breathing room.
Political Tool.
Overcapacity.
Cautionary notes.