What is the purpose of a tariff?

The purpose of a tariff is primarily to protect domestic industries. Tariffs are taxes imposed on imported goods, making them more expensive in the domestic market compared to local products. By increasing the cost of imports, tariffs encourage consumers to buy domestically produced goods, thereby supporting local businesses and industries. This protection can help foster job creation within the country and allow emerging industries to grow without facing overwhelming competition from established foreign companies.

Strengthening domestic industries through tariffs can lead to a more self-sufficient economy and can also be a tool for the government to control trade balances, responding to international trade dynamics. Well-implemented tariffs can also lead to negotiations with trading partners to strike a balance that benefits both domestic producers and consumers.