Tariff

Definition

A tariff is a tax imposed by a government on imported goods or services, designed to raise revenue or protect domestic industries from foreign competition. Tariffs increase the cost of imported goods, making domestic alternatives more price-competitive. They are a central instrument of trade policy and can be used strategically to pressure trading partners, rebalance trade deficits, or safeguard national security interests. Retaliatory tariffs between major economies can escalate into full-scale trade wars. The World Trade Organization (WTO) provides frameworks for tariff negotiations, though unilateral tariff actions outside WTO rules remain common.