Tariff
Definition. A tariff is a tax imposed by a government on imported goods, raising their price in the domestic market. As a tool of protectionism it makes foreign goods less competitive against domestic substitutes, reducing the quantity of imports and shielding domestic producers from foreign competition.
A tariff raises domestic price and output, lowers imports, and generates government revenue, but it reduces consumer surplus and creates a deadweight welfare loss from inefficient domestic production and forgone consumption.
This term belongs to Protectionism in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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