A government imposes an import tariff on consumer electronics. What is this most likely intended to do?

A government imposes an import tariff on consumer electronics. What is this most likely intended to do?

• A. Protect its domestic consumer electronics industry from competition
• B. Lower consumer prices by subsidizing manufacturers
• C. Increase imports by making foreign goods cheaper
• D. Reduce government revenue

Answer: (A)

Tariffs are protective trade tools: they raise the price of imports to give domestic producers a price advantage. When a government imposes an import tariff on consumer electronics, foreign-made goods become more expensive relative to domestic products. That tends to shrink demand for imports and strengthen the domestic electronics industry by shielding it from foreign competition, supporting local jobs and investment. Tariffs also generate government revenue, but the primary aim here is to protect domestic industry. The other ideas don’t fit because subsidies would lower costs, tariffs don’t make foreign goods cheaper, and tariffs don’t reduce government revenue.

Tariffs are protective trade tools: they raise the price of imports to give domestic producers a price advantage. When a government imposes an import tariff on consumer electronics, foreign-made goods become more expensive relative to domestic products. That tends to shrink demand for imports and strengthen the domestic electronics industry by shielding it from foreign competition, supporting local jobs and investment. Tariffs also generate government revenue, but the primary aim here is to protect domestic industry. The other ideas don’t fit because subsidies would lower costs, tariffs don’t make foreign goods cheaper, and tariffs don’t reduce government revenue.