Ecuador Expat Forum

General
Joined 2011
Posts: 23

8 years ago

Exorbitant Tariffs

8 years ago

Sure, and the government is cash strapped, but the high tariffs probably reduce the sales so much that they are self defeating.
Given that many items may be considered luxuries and affordable only by the oligarchy, and tariffs on items that compete with Ecuadorian produced goods are understandable, unless, of course, the prices of local goods are inflated to match them.
On another level, the tariffs on foreign products other than those from China, promote low quality goods that end up costing Ecuadorians more in the long run due to less durability and the cost of maintenance.
Ecuador is like an island since its overland trade is minimal. Shipping and air transport are the primary means of transport. Although that increases the cost of imports, the selective tariffs do more damage.
For example, a Japanese motorcycle priced in Quito was $10K more than the same bike's MSRP in the US. Is shipping from Japan to the US that much less than to Ecuador? Perhaps a bit, due to volume, but even then, transport of that same bike from the US to Ecuador would not account for the price difference even with all of the middle men.
Not being an economist I cannot say, but the impact on businesses and the people may be more than the government understands, and is, itself losing income by the exorbitant tariffs, IMHO. I expect that many businesses will experience a reduction in sales. For example, Club Correos has folded due to the additional $42 tariff on small packages imposed to protect Ecuadorian clothing makers from internet purchases from the US.

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