ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Key Takeaways. Governments impose tariffs to raise revenue, protect domestic industries, or exert political leverage over another country. Tariffs often result in unwanted side effects, such as higher consumer prices.

Detailed explanation-2: -The main purpose of a tariff is to increase the price of imported goods in order to protect domestic industries from foreign competition and to raise revenue for the government.

Detailed explanation-3: -The primary benefit is that tariffs produce revenue on goods and services brought into the country. Tariffs can also serve as an opening point for negotiations between two countries. The GATT, WTO, and other trade agreements use regulation of tariffs as a way to bring nations together to determine economic policy.

Detailed explanation-4: -Theoretically, tariffs can cause inflation. Tariffs increase the price of goods and services in domestic markets by applying a tax on imported goods that is paid by the domestic importer. To cover the increased costs, the domestic importer then charges higher prices for the goods and services.

Detailed explanation-5: -Tariffs are the taxes imposed by a government of a nation on the imported products. Tariffs will increase the price of imported items that will discourage suppliers from supplying more products as it increases the cost of exporting, which results in an increased price of such products.