What is a tariff?

A tariff is defined as a tax imposed by a government on imported goods and services. This financial charge serves multiple purposes, including generating revenue for the government and protecting domestic industries from foreign competition by making imported goods more expensive. Tariffs can influence trade dynamics by impacting prices, sourcing decisions, and trade relations between countries.

In the context of international trade, understanding tariffs is essential for businesses involved in importing and exporting, as they directly affect the cost structure and pricing strategy. While subsidies, investments, and fees are related concepts in the realm of economics and finance, they do not specifically describe the characteristics or functions of tariffs. Thus, recognizing tariffs as taxes is crucial for grasping their role in trade policies and economic strategies.