Tariff

With a long and contentious history, a tariff is a tax imposed by one country on the goods and services imported from another country. A tax levied on imports or exports between sovereign states, tariffs are used to restrict imports by increasing the price of goods and services purchased from another country, making them less attractive to domestic consumers. Also known as customs duty, tariffs are one of the oldest trade policy instruments that are meant to reduce pressure from foreign competition and reduce the trade deficit, depending on whether the levying country is large or small – not in terms of size but the potency of its trade and ability to influence world prices. Tariffs often result in unwanted side effects, such as higher consumer prices.