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Reasons for Imposing Tariffs on Imported Gold

Question

Explain the reasons why a government may impose a tariff on imported gold.

Category:

International Trade and Exchange Rates

Preview Answer

Relevant points:

-To discourage the purchase of foreign gold.
-The reduced demand for imported gold will help to improve the current account position on the balance of payments .
-To raise revenue to fund government expenditure.
-This increased revenue can be spent in the economy in order to promote economic growth. e.g more -spending on education and training.
-If gold is an infant industry a tariff on gold would enable domestic industries to grow .
-The government may impose tariffs to allow the domestic gold industry to expand and protect related jobs.
-This may be a retaliation in response to trade restrictions on gold imposed by other countries.

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