Tariffs are taxes levied on goods imported or (less often) exported as they cross a geographical border. They raise revenue but are normally evaluated by reference to their impact on the economy, which usually means the protection they provide to domestic producers and their effect on the terms of trade. Tariffs can exploit a country’s monopoly or monopsony position in world markets, but only if that is not already exploited by private firms within the country. An import duty can be used as countervailing power to prevent a country being exploited by a foreign exporter’s use of his monopoly power.
KeywordsAd valorem tariffs Cartels Devaluation Effective tariffs Export tariffs Extortion tax Free trade Great depression Hamilton, A. Import substitution Infant-industry protection Lerner, A. List, F. Monopoly Monopsony Protection Scitovsky, T. Specific tariffs Tariffs Terms of trade Value added
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