Definition: A tax imposed on imported goods to raise revenue or protect domestic industries from foreign competition.
Tariffs raise import prices, reducing quantity imported and benefiting domestic producers who face less competition. But consumers pay higher prices, and efficiency is lost (deadweight loss). Tariffs also invite retaliation from trading partners. Arguments for tariffs include protecting infant industries, national security, and preventing
US steel tariffs raised prices for construction and manufacturing, helping domestic steel producers but hurting steel-using industries. China retaliated with tariffs on US agricultural exports.
Tariffs are the classic trade barrier on AP exams. You
Category: International Trade