Not only does the exchange rate vary the costs of trade, but everycountry has different tariffs, trade sanctions, and barriers that they choose to impose ontheir import and export markets. For example, the import and export market inagriculture between Japan and the U.S., and China and the U.S. has undergone numerouschanges in the past few years, including the import of rice. China, which describes itsexchange system as a managed float, continues to impose barriers on the importing ofU.S. good and services. In 1996, China announced a new tariff that would apply toagricultural items, such as rice. However, as of late 1998, they had still not announcedthe specifics of this tax, which complicates trade in these goods.Japan has also imposed tariffs and barriers to restrict trade. While it has reduced many ofits formal tariffs, Japan still maintains control by imposing nontariff barriers. Japan hasalso begun to import rice into its country. However, rather than introducing the rice tothe countrys consumers, the rice is stockpiled for food aid to third world countries. VI. CONCLUSIONThe exchange rate is one of the primary factors in the business of international trading. While there have been system changes in the United States, from the Bretton Woods tothe present floating rate; and there are differing systems that are implementedthroughtout the world, the fact remains that the exchange rate is the basis for an amazingamount of financial decisions - including trade. Economists will argue over whichsystem is best, but there is not doubt that whatever system is chosen will still have to beable to withstand the constant fluctuations in supply and demand. In the past few years,the world has seen supposed stable markets plummet after an overvaluation of theircurrency. Brazil and Russia are just a few of the countries that were affected - Mexico,Asia,Thailand, Malaysia, the Philippines, and Indonesia are other countries who have hadto...
