Opportunity Costs exists in Trade but if trade is seen as a Comparative Cost Advantage theory of Ricardo, its more supplementing rather than complimenting the growth process of each country’s GDP. Ricardo proposed that amongst all the hours devoted to each product’s production, there is efficiency in that product’s production in each country whereby there are reduced hours in production to produce the same. Also, if it also has better quality ensured, then ultimately it allowed the respective country to produce that output effectively.

Next comes the Hecksher-Ohlin Theorem of Trade.It proposed that the Labour Abundant Country exports the Labor Intensive products and Capital Abundant Country exports the Capital Intensive Products. The empirical results of the Hecksher Ohlin Theorem suggest that if the Labour Abundant country exports the Capital Intensive Products and the Capital Abundant Country exports Labour intensive Products, then the Trade is not fruitful in the long run for the globalised world.This is termed as the Leontiff Paradox.

United States, being the richest country in the world, in order to protect and avoid protectionism beyond a particular point such that it hurts all the other respective trading partners could have an alternative strategy.It can give a Multiple Triple Column Tariff rather than Protectionist Tariff. A Multiple Triple Column Tariff is such that it has 3 tier structure. General tariff, which is the maximum price,intermediate, which is the minimum tariff rate and Preferential Tariff e.g. Small tariff on goods which were earlier duty free which, if not needed could go tariff free.

If there is a tariff imposed which is not justifiable protectionist but discriminatory, then the government can create a trade war with it. Moreover, there are other losses of it too on the public exchequer of funds. First, there is a deadweight loss to the society in general as people stop the product consumption to a large extent. Second, there is a dead weight loss as domestic inflation sets in for that product and harms the consumer. Also, there is a loss of Consumer Surplus as the consumers get less quantity for their survival. The producer surplus exists, but that is a mere transfer from the government’s revenue to the producer of the product. The government overall retains part of the tariff money after paying back the producer surplus, but the dead weight loss and the consumer surplus loss of a discriminatory tariff far outweighs the money earned by the government from the discriminatory tariff.

In a country like India, the manufacturing industry, agricultural sector are both in the nascent stage of operation. So, a protectionist tariff ensures smooth scale of operation and is non discriminatory and does not create the above mentioned effects of a discriminatory tariff such as that in the United States and protects the nascent industries.

So, what is the expected globally aligned future of Trade Tariffs? The global integration of countries means that the world would be united in groups and would give preferential trade tariffs on their products to the countries united with them on all productive aspects and this would subsequently harness the risk hedge in trade.