Today I wanted to research tariffs and the reason for expensive products in Brazil. At first I had trouble finding articles about it and I had to get help from my friend Guilherme to find some good articles about it. After reading a few articles, Brazil turns out to have some very high tariffs on foreign imports. The purpose of these imports are to protect Brazilian industries which are at a disadvantage against foreign industries. Brazil is still catching up when it comes to the quality of their products. While Brazil catches up to foreign competitors, these tariffs are meant to protect them. The more difficult the product is to make, the higher the tariff. For example, most cars and computers are difficult to make and the process of manufacturing them is expensive; for this reason most car imports and technology imports are taxed 30%. That is alot! Inexpensive items such as t-shirts that are imported usually have a tax of around 5%. These high taxes make it profitable to travel to the United States. They would save more money than was spent on the flight and hotel. So many Brazilians are buying products in the United States, that Brazilian President Dilma, issued a 6% tax on products bought by credit card in a foreign country. Even with this new 6% tax, Brazilians spent $1.8 billion in Miami alone last year. Politicians in Brazil are confused on what to do about this situation. If they get rid of their tariffs, Brazilian industries would suffer, but if the tariff is too high, Brazilians will travel to other countries to buy products. I will continue to research this issue because it plays a very important roll in this increase of Brazilian tourists in the United States.
Link 1 - http://www.bloomberg.com/news/2011-08-01/brazil-hits-china-with-tariffs-as-potholes-erode-new-silk-road.html
Tariffs have played an important role in US history as well---they were certainly one of the factors that helped create division in between the North (which favored them, to protect American industry) and the South (which didn't, because it made luxury goods and even some basic agricultural implements very expensive).
ReplyDeleteKeep up the good work. Are you making progress on the books which were on your reading list as well?
I still need to start reading that book. I have been so busy this week with car repairs and appointments. I will get started on the book this weekend. I will get my other research out of the way for now. I really enjoy this project, I like economics and global affairs! It's been an interesting subject to study.
ReplyDeleteThis is fascinating! I never thought tariffs would be so interesting! I can't wait to read more about what you find.
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