A tax implemented on imported goods with the primary intention of shielding domestic industries from foreign competition. This economic policy increases the price of imported items, making domestically produced goods more attractive to consumers, thereby promoting local manufacturing and employment. For instance, a tax on imported steel could make American-produced steel more affordable and competitive in the domestic market.
Such tariffs, historically, have been employed to foster industrial growth, particularly in developing economies. By reducing reliance on foreign products, these measures can stimulate domestic investment and innovation. They can also be used to safeguard jobs in industries vulnerable to cheaper foreign labor. However, potential drawbacks include higher prices for consumers, retaliatory tariffs from other nations, and reduced overall trade, which can negatively impact economic efficiency and global cooperation.
