From China’s rapid economic ascent to the stagnation facing developed nations, trade tariffs have profound effects, influencing international trade

The present world is witnessing a situation of several impending tariffs on international trade. Tariffs in international trade are an instrument to reduce imports from specific countries and to promote indigenous production of goods and services. Countries grow rich by producing and selling value-added goods and services. The buyers of these goods and services can be within the country or outside. Obviously, more buyers are outside than inside and for this reason, exports hold the prime key to countries’ enrichment.

The newly installed government in the USA is proposing to impose trade tariffs on several countries ostensibly to reduce the burden of taxes on the domestic population and promote indigenous manufacturing of goods. For any country, it is the balance of trade i.e. the excess of exports over imports that determines its buying capacity in the international market as well the strength of its monetary currency vis-a-vis the international ruling currency US Dollar. This is true of every country except the USA because its currency is not pegged to gold whereas other currencies are. For this reason, we see how post World War 2 (1939-1945), Japan and Germany developed fast a big indigenous manufacturing capability based on modern technologies and through extensive exports of valued added industrial goods like machinery, automobiles and other technological products.

The currencies of these countries gradually strengthened and a stage was reached when their products became price uncompetitive in exports. For example, the Japanese Yen which was........

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