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Trade Policy

Trading Term

Trade policy is a crucial aspect of a nation’s economic strategy, influencing how it engages with global markets. A key component of trade policy is the use of tariffs, which are taxes imposed on imported goods. Tariffs can serve multiple purposes: they can protect domestic industries from foreign competition by making imported goods more expensive, generate government revenue, and sometimes be used as a tool in international negotiations. However, high tariffs can lead to trade wars, where countries retaliate with their own tariffs, potentially harming global trade. Understanding the balance and impact of tariffs is essential for effective trade policy.

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