Free Access | 2024-04-12

What are the implications of imposing import tariffs on domestic manufacturing production in Uganda?

Authors/Editors: Aida Kibirige Nattabi ,  Justine Luwedde

Abstract:

The study examines the effect of tariff increments on the production of selected products in Uganda in the FY 2019/20. The results show continued importation of the selected products even after the tariff increments. This is because manufacturers are constrained and lack the capacity to; produce some of the products, adjust production to meet the local demand, and depend on imported inputs. In addition, there is a loss in consumer welfare in the short term, and the total revenue effect is positive across all tariff lines but not significant. We also note that the expected revenue gains from the tariff increments may not be realized in the short run since most of Uganda’s trading partners are within the EAC and COMESA and thus exempted from this tariff increment. We conclude that the government should first identify and address the supply side constraints of producers and their capacity deficiencies and then focus on stimulating domestic production rather than imposing tariffs