When material inputs enter a country at a very low duty while the final imported product is protected by a high duty,the result tends to be a high rate of protection for domestic producers of the final product.

Question

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This is known as tariff escalation, where the duties are higher on final products than on intermediate goods. This creates an advantage for domestic producers of the final product as they face less competition from foreign producers of the same product.

When Material Inputs Enter a Country at a Very Low