A tariff is a tax imposed by one country on the goods and services imported from another country. Governments primarily impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country. It is used to restrict imports by increasing the price of goods and services purchased from another country, making them less attractive to domestic consumers.



Mentioned by the Following


1962 Trade Act

Tariffs Take Time to Implement (Modern WTO Rules)
  1. Need to be announced
  2. Need to be subject to public comment
  3. Are subject to waiting periods
  4. Can be activated after all the above are complete
  • Overall this can take many months
  • At the initial onset, makes it hard to tell if tariffs will actually be implemented or negotiated beforehand

Impact of Tariffs

  • Tariffs create a domestic price umbrella (import price + Tariff)
  • Domestic suppliers now charge the umbrella price (import price tariff)
  • Impact on the economy is therefore the totality of domestic consumption (since all prices increased

Global Tariff Levels
  • Global tariff levels have declined over the last 30 years to 2% (2017) from 30% (1980s)