ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -If you are a consumer, tariffs affect you because they result in an increase in the price of imported goods. If you are a domestic producer, tariffs can help you by making your goods cheaper compared to international goods, thus helping your business.

Detailed explanation-3: -The United States currently has a trade-weighted average import tariff rate of 2.0 percent on industrial goods. One-half of all industrial goods imports enter the United States duty free.

Detailed explanation-4: -Obviously, a tariff also generates revenues for the government of the importing country (revenue function). Tariffs therefore benefit the government and producers of the importing country in the form of tax revenues and producer surpluses at the expense of its consumers in the form of higher prices.