tariff
A tax imposed by a government on imported or exported goods, used to raise revenue or protect domestic industries from foreign competition.
Example
“The 25% tariff on steel imports raised prices for US manufacturers but protected domestic steel producers from cheaper foreign competition.”
Memory Tip
TARIFF = a TAX on imports. Makes foreign goods more expensive to PROTECT domestic producers.
Why It Matters
Tariffs affect the prices you pay for imported goods at stores, from clothing to electronics to groceries. Understanding tariffs helps you anticipate price changes and make informed decisions about when to purchase items, especially when trade policies shift or new tariffs are announced.
Common Misconception
Many people believe tariffs are paid directly by foreign companies, but in reality they are usually passed on to consumers through higher retail prices. The tariff is collected by the importing country, not paid by the exporting country, so you often end up bearing the cost through increased prices.
In Practice
When the United States imposed a 25 percent tariff on steel imports in 2018, the price of American-made automobiles increased by hundreds of dollars per vehicle because car manufacturers use imported steel in production. A car that previously cost 30,000 dollars might have cost 30,300 dollars or more due to the tariff being passed along to consumers.
Etymology
From Arabic 'ta'rif' (notification, inventory) through Italian 'tariffa' — a schedule of DUTIES payable.
Common Misspellings
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See Also
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