What is a tariff?

A tariff is fundamentally a tax that a government imposes on imported goods. This tax increases the price of imported products, which can influence consumer behavior by making domestically produced goods more attractive. By raising the cost of foreign goods, tariffs can help protect local industries from foreign competition, as consumers may choose to buy domestic products instead.

This mechanism serves various purposes, such as generating government revenue, protecting emerging domestic industries, and responding to trade imbalances. Tariffs can also impact international relations and trade agreements, as countries may negotiate tariffs as part of broader trade deals. The clear definition and role of tariffs underline how they function within the broader context of international trade and economic policy.