Tariff
A tax imposed by a government on imported or exported goods.
What is Tariff?
A tariff is a government-imposed tax on goods crossing international borders, most commonly applied to imports. Tariffs serve two main purposes: generating government revenue and protecting domestic industries from foreign competition by making imported goods more expensive. The cost of tariffs is typically passed on to consumers and businesses that buy imported goods. Economists generally view tariffs as economically inefficient because they distort market prices, reduce trade volumes, and can provoke retaliatory tariffs from trading partners — escalating into trade wars that harm both sides.
Example
In 2018–2019, the US imposed tariffs of 25% on $250 billion worth of Chinese goods as part of a trade dispute. China responded with its own tariffs on US agricultural exports, raising costs for American farmers and prompting federal aid payments to offset losses.