ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A protectionist trade policy allows the government of a country to promote domestic producers, and thereby boost the domestic production of goods and services by imposing tariffs or otherwise limiting foreign goods and services in the marketplace.

Detailed explanation-2: -Protective tariffs are designed to shield domestic production from foreign competition by raising the price of the imported commodity. Revenue tariffs are designed to obtain revenue rather than to restrict imports.

Detailed explanation-3: -In some cases, “tariff quotas” are used to strike a balance between market access and the protection of domestic industry. Tariff quotas work by assigning low or no duties to imports up to a certain volume (primary duties) and then higher rates (secondary duties) to any imports that exceed that level.

Detailed explanation-4: -Tariffs are a tax on imports paid by importing companies in the country that imposed the tax. The cost is usually passed on to consumers. Tariffs are meant to protect domestic industries by raising prices on their competitors’ products.

Detailed explanation-5: -Tariffs increase the prices of imported goods. Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result.