A good contextual example here of import quotas and import tariffs in tandem! Think carefully about the impact of the tariffs not just on the consumer, but also the companies that use sugar as a raw material.
According to reports, China, the world’s biggest sugar importer, will levy an extra 45% import duty in addition to its current 50% tax on out-of-quota sugar imports, from May 22 to May 21 next year.
The country allows just under 2 million metric tons of sugar imports at a duty of 15% every year, as part of its commitments to the World Trade Organization. But for out-of-quota sugar imports, China imposes a 50% duty currently. The tax rate will be reduced to 40% for the following year, and then 35% in the year after that, according to the Commerce Ministry statement.
The aim of the quotas and the import tariff is designed to provide protection for domestic sugar producers - but keen economists will be able to both analyse and evaluate the extent to which trade barriers do protect producers in the long run and the spillover effects for Chinese consumers and other industries that use sugar as a raw material.
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