Tariffs
By Dhriti, Ishita, Madhav, Paarth
Definition & Concept
Definition: A tariff is a tax placed on imported goods or
services by a government.
Purpose: To protect domestic industries, raise revenue, or
influence trade balance.
While tariffs help local producers, they often lead to higher
prices for consumers.
Tariffs can also generate government revenue but may reduce
overall efficiency.
Free trade agreements (like WTO) aim to reduce tariffs globally.
(Real-life example: NAFTA or USMCA)
Real-World Case Study - US China Tariff war (2018)
In 2018, Donald trump placed a 20% tariff on Chinese washing
machines in an attempt to “benefit the consumers and create a lot
of jobs.” This forced US importers to raise the price of their goods in
order to account for the tariff they are paying the US government.
The domestic producers also raised their prices, in order to account
for the rising demand, which doesn’t benefit the consumer at all. It
did create jobs however, due to foreign companies opening plants in
the US to evade the tariffs. The decision overall earned the US
government 82 million dollars annually, while also costing consumers
1.5 billion dollars more. Tariffs aren’t always used for employment
however. Trump also placed tariffs on steel and aluminium, materials
used to create military technology, helping with national security.
They also help when competing with competitive producers like
China, who mass produce steel and aluminium at below market
value, forcing them to raise their prices.
Impact on trade
Affects trade flows, prices, and production patterns.
Creates short term protection for some groups but
long term challenges for others.
Winners Losers
Domestic producers (eg; U.S. steel & Consumers (face higher prices for International Monetary Fund.
“The Impact of U.S.–China
aluminum industries) imported goods)
Trade Tensions on Global
Trade.” IMF Blog, 21 May 2019
Government (earns revenue from Exporters (face retaliation & less
tariffs) demand abroad)
U.S. imports from China dropped after
Workers in protected industries (short Global supply chains & import dependent tariff increases ⟶ trade volumes react
term job security) businesses
immediately to protectionist measures.
conclusion
Tariffs help protect local industries but often harm
global trade. While they can support domestic jobs
and reduce imports, they also raise consumer prices
and cause international tensions. For example, India’s
high tariffs on imported electronics encouraged local
production but made smartphones more expensive
for consumers.
references
“Tariff.” The Economic Times, 2025, [Link]/definition/tariff?
from=mdr. Accessed 12 Nov. 2025.
Kenton, Will. “What Was the North American Free Trade Agreement (NAFTA)?”
Investopedia, 2025, [Link]/terms/n/[Link]. Accessed 12 Nov.
2025.
Stumo, Michael. “India Raises Tariffs on Electronics to Curb Surging Imports.”
Prosperous America, 19 Dec. 2017, [Link]/india-raises-tariffs-on-
electronics-to-curb-surging-imports/. (Coalition For A Prosperous America)
Mitra, Shubha. “India’s Electronics Tariffs Among Region’s Most Competitive, Says
Report.” [Link], 7 Aug. 2025, [Link]/industry-
buzz/indias-electronics-tariffs-among-regions-most-competitive-says-report/.
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