Faced with the controversy caused by President Gustavo Petro’s proposal to raise tariffs to offset the rise in interest rates with the purpose of protecting national industry, the country’s economic sectors are divided in their opinions.
While for some, this measure would hit producers, for others it could favor national production over foreign competition.
According to Pedro Sarmiento, Managing Partner of Taxes and Legal Affairs at Crowe Colombia, a firm that provides professional auditing, legal and tax advice services for the business sector, “the truth is that if tariffs were established or increased for products imported into Colombia, it is This would probably have a negative impact on the pocketbook of Colombians, who would have to pay more for them. However, looking at it objectively, the measure could also have positive effects on the national economy, as it could stimulate the growth of the national industry, and even job creation.
more analysis
Faced with this possible decision by the national government, Sarmiento assures, “it is essential that any decision on the increase in tariffs be based on a careful analysis of the possible effects, both for and against for the economy and the well-being of the population.” in general. In the same way, other trade protection measures could be considered that could be less restrictive and more effective in protecting national production and promoting economic growth.
For the Crowe Colombia expert, however, it is important to put these pros and cons on the table, which he analyzes as follows:
Negative effects
Price increase. If tariffs on imported products are increased, it is likely that prices to the final consumer will increase.
This is because tariffs are a tax that is applied to the value of the imported product, which increases its cost and, consequently, the final price that the consumer pays.
reduced trade
Higher tariffs may reduce international trade and competition.
If the prices of imported products become higher, consumers may prefer to buy domestic products, which could reduce importation and access to a wider range of products.
job loss
If tariffs on imported products are increased, some domestic companies may see their demand decrease, which could result in job losses within the sector.
positive effects
Protection of the national industry
Higher tariffs can protect domestic production from foreign competition. This can stimulate the growth of the national industry and job creation.
Foreign exchange earnings
Higher tariffs can increase government revenue by taxing imports. These revenues can be used to finance economic and social development programs.
Reduction of the trade deficit
Higher tariffs can reduce the trade deficit, since domestic products can become more competitive compared to imported products.
On the other hand, Pedro Sarmiento assures that in this analysis it is important to take into account the issue of Colombia’s free trade agreements with other countries, since they establish certain provisions and commitments that must be respected, and non-compliance with which may have consequences. legal and commercial negative for the country and for its international commercial relations.
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