In certain regions, international products are costly because of the applied high taxes. It is often argued that developing nations should apply large tariffs on international goods to grow their economy. While tariffs can help grow local businesses, they might affect international relationships.
On the one hand, local companies do not have enough reach to grow their business because they do not have enough customers buying from them; therefore increasing taxes on international goods can divert people’s minds toward country-made products. Additionally, it will raise the economy of the developing nation. For instance, India put high taxes on Chinese goods in order to influence consumers to buy made-in-India products. Moreover, it helped India to cut off many unusual spending and become an independent country.
On the other hand, increasing tax rates to help local industries could have many detrimental impacts on international relations by creating a farce between developing nations. The majority of good-quality products come from foreign markets, and people usually purchase those over others, hence that is a large portion of the seller country’s income. Regulating those would affect the alliances between nations, which is not acceptable. For example, the USA and China are having issues regarding the tax situation and neither America nor China has enough resources to solve this problem which initiates a huge issue between those and many other countries and affects their economies.
In conclusion, although applying tariffs can help developing nations grow industries, but must be used wisely with other policies to mitigate possible consequences like breaking great alliances.