Tariff
MacroDefinition
Tax imposed by a government on imported goods. Two main rationales: (a) protect domestic industries from foreign competition, (b) raise revenue or pressure trading partners.
Economic consensus: tariffs reduce overall economic welfare (importers and consumers bear most of the cost; exporting countries retaliate). Politically popular because the costs are diffuse (small price increases) and benefits concentrated (specific industries / unions).
Economic consensus: tariffs reduce overall economic welfare (importers and consumers bear most of the cost; exporting countries retaliate). Politically popular because the costs are diffuse (small price increases) and benefits concentrated (specific industries / unions).