Question

a group of companies in india wishes to import high quality ACs from south Korea but have to pay a huge import tax on them which would make the ACs very expensive leading to a decline their sale . ascertain the role of the import tax in this situation

Answer 1

The Import tax is acting as a Trade Barrier.

Answer 2

The Import tax is acting as a Trade Barrier. Trade barriers are government-induced restrictions on international trade. The barriers can take many forms, like the Tariffs and the Non-tariff barriers to trade.

Trade barriers are often criticized for the effect they have on the developing world because rich-countries call most of the shots and set trade policies and the developing countries still face high barriers.

The negative aspect of trade barriers is that they result in a limited choice of products and would, therefore, force the customers to pay higher prices and accept inferior quality. Also, the trade barriers obstruct free trade.