Tariffs

• What is a tariff?

  A tariff is a tax on imported goods/services.
• Who has to pay the tariff when goods/services cross the border?

  Domestic producers/retailers have to pay the tariff.
• How does a tariff affect the cost of production for domestic firms?

  A tariff raises the cost of production for domestic firms.
• What do firms often do with the increased costs due to tariffs?


  Firms often pass on the increased costs to consumers in the form of higher prices.
• How do higher prices due to tariffs affect domestic firms' output?

  Higher prices allow some domestic firms to increase their output.
• What is the law of supply in relation to tariffs?

  The law of supply states that higher prices allow firms to increase their output.
• What is the impact of tariffs on efficient and inefficient domestic firms?

  More inefficient domestic firms are now producing at the expense of more efficient firms globally.
• What may happen to employment with increased domestic output due to tariffs?

  Employment may increase with increased domestic output.
• What is the effect of a tariff on the final price of a good to the consumer?

  A tariff is likely to raise the final price to the consumer.
• What is the likely outcome on demand when a tariff raises the price of a good?

  Demand is likely to fall.
• What happens to the volume of imports when demand falls due to a tariff?

  The volume of imports will fall.
• What is a deadweight welfare loss in the context of tariffs?

  It is the loss to the country associated with the imposition of the tariff.
• How does the imposition of a tariff affect consumer behavior?

  Consumers buy less at a higher price.
• What is the relationship between tariffs and consumer prices?

  Tariffs lead to higher consumer prices.
• What is the overall economic impact of a tariff on imports?

  A tariff leads to a decrease in demand and a reduction in the volume of imports.
• example of tariffs being imposed by other countries?

  in 2020 china imposed anti-dumping tariffs of 80% on Australian wheat