ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Tariffs are used to restrict imports. Simply put, they increase the price of goods and services purchased from another country, making them less attractive to domestic consumers.

Detailed explanation-2: -Tariffs have three primary functions: to serve as a source of revenue, to protect domestic industries, and to remedy trade distortions (punitive function). The revenue function comes from the fact that the income from tariffs provides governments with a source of funding.

Detailed explanation-3: -Tariffs are a form of tax applied on imports from other countries. Economists say the costs are largely passed on to consumers. They have historically been used to protect domestic industries, including agriculture and automobiles, as well as to retaliate against other countries’ unfair trade practices.

Detailed explanation-4: -What is the purpose of a tariff? Tariffs are a way for governments to not only collect revenue but also protect domestic businesses. Tariffs increase the price of imported goods, making domestic goods cheaper in comparison.

Detailed explanation-5: -A tariff or duty (the words are used interchangeably) is a tax levied by governments on the value including freight and insurance of imported products. Different tariffs applied on different products by different countries.