Definition:

A tariff is a tax levied on imported goods or services by a country. It is a protectionist measure designed to regulate the flow of trade and generate revenue.

Objectives:

• Revenue generation: Tariffs can generate significant revenue for governments.
• Protectionism: Tariffs can protect domestic industries from foreign competition.
• Balance of payments: Tariffs can influence the balance of payments by increasing the cost of imports and reducing the demand for foreign currency.
• National security: Tariffs can be used to restrict the flow of goods that could be used for military purposes.

Types of Tariffs:

• Specific tariffs: Imposed on a specific quantity of a good.
• Ad valorem tariffs: Based on the value of the good.
• Compound tariffs: A combination of specific and ad valorem tariffs.
• Free trade: No tariffs are imposed on goods between countries.

Examples:

• A country imposes a 10% tariff on imported cars.
• A country imposes a $50 tariff on each ton of imported coal.
• A country imposes a 20% tariff on all imported electronics.

Impact:

• Tariffs can raise prices for consumers and businesses.
• Tariffs can make it more difficult for businesses to import goods.
• Tariffs can have a positive or negative impact on economic growth.

Global Trade:

Tariffs are a major part of international trade negotiations. The World Trade Organization (WTO) is responsible for administering and regulating tariffs.

Additional Notes:

• Tariffs can be applied to a wide range of goods and services.
• Tariffs are typically applied to imports, but some countries also impose tariffs on exports.
• Tariffs can be adjusted over time.