Tariffs are taxes imposed by a government on goods imported from other countries. They are usually paid by the importing business to their home country's government and are often calculated as a percentage of the value of the imported goods (ad valorem tariffs) or as a fixed amount per unit (specific tariffs)
. The primary purposes of tariffs include:
- Protecting domestic industries by making imported goods more expensive, encouraging consumers to buy locally produced products.
- Generating government revenue.
- Addressing unfair trade practices such as dumping or subsidies by foreign countries.
- Serving as political tools to pressure other countries during trade negotiations or to address issues like immigration and drug trafficking
Tariffs can have various economic effects. While they may help domestic industries by reducing foreign competition, they often lead to higher prices for consumers and can provoke retaliatory tariffs from other countries. Additionally, tariffs can increase production costs for domestic industries that rely on imported materials, potentially harming those sectors
. In summary, tariffs are import taxes used to protect local industries, raise government revenue, and influence trade policies, but they also carry risks such as higher consumer prices and trade tensions
