Tariffs are the taxes a country’s government imposes on imported goods that must be paid by the buyer. For example, the UK Global Tariff (UKGT) applies to all goods imported into the UK – unless the country of origin has a free trade agreement with the UK. A supermarket sourcing food from a foreign country where tariffs apply will, as a result, most likely pass the cost on to its customers via higher prices. Businesses, consumers and governments alike have often viewed the lower prices associated with tariff-free trade as desirable and beneficial.
Free trade is supported by economic theory and evidence. One key idea is ‘comparative advantage.’ Nineteenth-century economist David Ricardo argued that countries benefit by specialising in the goods they can produce most efficiently (as a function of their own natural and human resources). Production of these goods can be expanded through trade with other countries, allowing businesses to achieve economies of scale. This means that the average cost per unit of goods falls when the volume of output increases, making goods cheaper for consumers both at home and abroad.
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