A tariff is a tax on imported goods. Governments impose them to raise revenue, protect domestic industries, or pressure trading partners. The importer pays the tax at the border. The cost is usually passed on to consumers through higher prices.

Tariffs have a long history. They funded governments before income taxes existed. They protected young industries in the 19th century. They deepened the Great Depression when countries retaliated with their own tariffs. Since World War II, average tariffs have fallen sharply under trade agreements.

Not all tariffs are equal. A small tariff on a luxury good may go unnoticed. A large tariff on steel raises costs for every industry that uses it. Targeted tariffs can protect jobs. Broad tariffs can spark trade wars. The line between protection and provocation is thin.

Types of tariffs

• Ad valorem: percentage of value
• Specific: fixed amount per unit
• Compound: both
• Retaliatory tariffs
• Anti-dumping duties