Governments or public authorities employ trade barriers, such as tariffs, to control the free inflow of international goods and services. Although these barriers often discourage trade between nations, they come in handy when a government wants to improve the consumption of local goods, create local employment, foster national security and increase national revenue.
Increased Consumption of Local Goods
Duty tax increases the overall cost of imported goods and services. When a government levies this tax on imports, it aims to discourage local consumers from importing. As a result, the consumption of locally-produced goods increases since there are fewer substitute or alternative goods. For example, the gas-guzzler tax imposed by the United States government on fuel-inefficient foreign-made vehicles makes them cost more than vehicles manufactured locally. Many consumers will, therefore, go for domestic car makes.
Increased Domestic Employment
As the consumption of local goods increases, so does the demand. To satisfy the growing consumer demand, domestic producers have to produce more products. This, according to the Economic Policy Institute, a Washington-based non-profit think tank, should lead to the creation of more jobs. With more jobs available, unemployment rates will go down, and previously unemployed people will have an income they can use to improve their welfare.
Enhanced National Security
The national security of a government that heavily imports military weapons can be compromised should the exporting country restrict the export of the weapons. To prevent this from happening, a government, especially that of a developed country, tries to encourage domestic production of defense equipment. It also adopts a trade embargo or bans the importation of the equipment. As an example, in 2013 the Obama administration issued an executive order banning the re-importation of military weapons that had previously been exported from the United States. The goal was to keep them out of wrong hands and subsequently, enhance national security.
Enlarged National Revenue
Levying tariffs on imported goods and services is a strategy governments can use to increase national revenue. The duty from importers goes directly to the government’s revenue collection agency. Although tariffs are generally designed to discourage importation, some goods -- such as apparel and household appliances -- are so essential importers won't give them up. When the government raises tariffs on such goods, or starts taxing goods that were previously imported free of duty, it collects more revenue. The National Priorities Project, a non-profit organization that focuses on federal budget research, projects that custom duties will contribute 1 percent -- about $33 billion -- to the projected $3.3 trillion tax revenue for the year 2015.
Improved Consumer Protection
The government sets import regulations on some consumer goods to ensure they are safe for domestic use or consumption. When importing foods, medicines or cosmetics into the US, for instance, importers must ensure the manufacturers, producers or handlers of these products are registered with the U.S. Food and Drug Administration. The imports must also be inspected by the FDA before they are allowed into the country.
Sienna Kossman is a graduate of University of Maryland University College, where she studied business administration. Kossman, an experienced business analyst, has been writing professionally on business and personal finance topics since 2010. Her work has appeared on the website of the U.S. News & World Report.