The globalization of business and modernization of transport and communication systems has dramatically influenced the current market trades. Today, there is steep competition in the market place; between the locally made goods and imported goods. The international trade system has both positive and negative effects on the locals of each particular nation. However, the nature of the reputations of global trade depends on the dimension at which one approaches them. To me, international trade has impacted more merits than demerits.
For instance, international trade has led to the diversification of goods and services. Today, it is possible to get all the required products in any local market within the United States. The availability of a wide range of goods and services in the local markets is one of the primary factors leading to increased living standards. For example, it is now possible to obtain all types of foods in the local markets. Food diversification has led to a balanced diet, hence significantly eliminating the chances of malnutrition. Besides, international trade has reduced prices of consumption goods substantially and subsequently created welfare gains for local consumers due to the availability of cheaply imported products and services (Marchand, 2017). For instance, looking around, I find that about three-quarters of the items that I have been using for the last two years are imported from neighboring countries, most of which come from Asia and Africa.
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Consequently, most of the items used locally within the United States are imported from neighboring countries. 80% of American imports are goods, such as clothes, computers, cell phones, pharmaceuticals, food substances, and petroleum products (Marchand, 2017). 18% of American imports are services, such as travel services, computer services, business services, and banking services (Marchand, 2017). Also, America imports industrial machinery and equipment, including automobile vehicles, parts, and engines (Marchand, 2017). American exports include capital goods, such as commercial aircraft, industrial machines, telecommunications, electric apparatus, and medical equipment. Besides, America exports products, such as chemicals, plastic, fuel oil, pharmaceuticals, cell phones, food substances, and automobiles (Marchand, 2017). Also, America exports services, such as computer services, travel services, financial services, and military services (Marchand, 2017). From the comparison between the American exports and imports, one may conclude that trade allows specialization based on comparative advantage (Marchand, 2017). For instance, comparative advantage undoes the constraint of specialization, allowing each individual to consume more than they can produce.
Today, many politicians are engaging in a heated debate about the issue of imposing tariffs on foreign imported products into the United States. Besides, the government is considering retaliatory tariffs imposed by foreign countries in the United States made goods. This article uses the word "tariff" to refer to the tax imposed by the government on goods and services imported from other countries ( Seretis & Tsaliki, 2015 ). The main aim of tariffs is to increase the prices of imported goods, and subsequently make the costs of the imported goods less desirable and hence less competitive, versus domestic goods and services ( Seretis & Tsaliki, 2015 ). Ultimately, a tariff is paid by whoever imports goods and services into a country from a foreign country; be it a company, an individual importer, or an organization.
A tariff is a form of government revenue and, therefore, goods to government projects. For example, in 2018, the United States obtained about $40 billion in federal revenue from the tariffs imposed on imported products and services ( Seretis & Tsaliki, 2015 ). The United States' tariff revenue is expected to rise significantly to at least $58 billion by 2026 ( Seretis & Tsaliki, 2015 ). Although the primary goal of the tariffs is to dissuade citizens from purchasing imported goods, the money obtained from the duties plays a critical role in increasing the government revenue, and hence foster completion of government developmental projects. However, tariffs are usually imposed on imported goods that bear close substitutes in the nation that citizens would be motivated to purchase because they are sold at relatively lower prices ( Seretis & Tsaliki, 2015 ). Therefore, the government may not impose tariffs on goods that have no substitutes in the country.
Tariffs on imports to the United States and the retaliatory tariffs imposed by foreign countries in the United States made goods have both the advantages and disadvantages to the involved parties. The nature of the fate of tariffs depends on the position of each concerned party in the trading system. For instance, tariffs protect local companies from the steep competition offered by foreign companies. Consequently, tariffs foster the survival of the local companies and local producers, hence creating job opportunities for American workers. At the same time, tariffs endanger the survival of foreign companies, leading to massive loss of job opportunities for foreign workers.
The imposition of tariffs increases the price of imported goods and services, thus increasing the cost of living of the American consumers ( Seretis & Tsaliki, 2015 ). Besides, tariffs discourage the importation of foreign goods and services from international companies and foreign producers. As a result, tariffs increase the accumulation of goods and services in foreign countries, reducing competition for goods and services in foreign countries. Therefore, foreign consumers purchase goods and services at relatively low prices, leading to increased living standards for foreign consumers.
By considering the foreign trade issue, it can be concluded that the background, education, and cultures of the people in the United States and the cultures in each trading country have a significant influence on the people's understanding of the importance of foreign trade ( Acharya, 2008 ). People from poor backgrounds prefer purchasing cheap goods and services. Such populations, therefore, support the importation of the cheaply purchased goods and services from foreign countries regardless of whether the importation will harm the local companies or not. Bearing in mind that the poor populations make the most significant percentage of voters, these citizens are likely to influence the politicians to support the removal of tariffs from the imported goods and services.
The people's way of culture also has a significant influence on people's understanding of foreign trade. The culture affects the people's menu, and subsequently, the cultural habits and local taste and preferences in each particular nation ( Acharya, 2008 ). This implies that global thinking and cultural understanding have significant effects in determining if the multinational firms dominate the local markets and the establishment of the global presence or not ( Acharya, 2008 ). Therefore, for international trade to overcome the local business, the multinational firms need to make the locals in their intended areas think globally. Such companies win customers from a variety of cultures through hiring managers from different cultures.
Education is another crucial factor that affects people's understanding of the necessity for foreign trade ( Acharya, 2008 ). Educated citizens have the knowledge on the importance of discouraging importation of the foreign goods and services that offer steep competition on the similar goods and services that are produced locally. Therefore, an educated population will support the imposition of tariffs on imported goods.
Understanding and accepting many cultural differences in a global context is an essential factor of production. As a business person, I need to develop cultural competence ( Johnson & Lenartowicz, 2006 ). Developing cultural competence is fosters one's ability to interact with people from different cultural backgrounds and help in the formation of business partnerships ( Johnson & Lenartowicz, 2006 ). Besides, the ability to understand and accept multiple cultural differences in a global context is highly applicable in operating in various institutions, such as learning institutions, multinational companies, and non-profitable organizations.
To foster the American understanding and acceptance of foreign culture, it is recommended that "Culture" should be made a compulsory subject in all elementary learning institutions. The knowledge in multinational culture must be imparted in all American citizens to increase the American understanding of the international trade systems ( Johnson & Lenartowicz, 2006 ). For instance, teaching "Culture" in all elementary schools will yield a population with an excellent understanding of the importance of promoting the local companies, and the local producers. This knowledge will help in boosting the American economy.
References
Acharya, C. (2008). Analyzing International Trade Patterns: Comparative Advantage for the World’s Major Economies: Journal of Comparative International Management. 11(2): 33-53. Retrieved from file:///C:/Users/User/Downloads/12446-Article%20Text-16748-1-10-20090831.pdf
Johnson, P., & Lenartowicz. (2006). Cross-cultural competence in international business: Toward a definition and a model. 37(4): 525-543. Available on DOI: 10.1057/palgrave.jibs.8400205
Marchand, B.U. (2017). How Does International Trade Affect Household Welfare? (Online). Retrieved from https://wol.iza.org/articles/how-does-international-trade-affect-household-welfare/long
Seretis, A., & Tsaliki, V. (2015). Absolute Advantage and International Trade: Evidence from Four Euro-zone Economies: Review of Radical Political Economics. 48(3): 438-451. Retrieved from https://doi.org/10.1177/0486613415603160
