Question

3. The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs. It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner? Who tends to be helped, and who is harmed by this cascading tariff structure?

Answer 1

Industrialized countries place lesser tariff on raw or intermediate components because they want it to e more affordable to indigenous manufacturers who will use them to produce affordable finished products.

They charge higher tariff on final products meant fro final markets because this will increase the prices of imported goods.

when this is done, the following are domestic producers are helped.

Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result.

Therefore, It is the consumers that are harmed because higher tariff increases the price per item.