What Is a Tariff?

tariff Credit: caleb jonasson/CC-BY-2.0

According to Investopedia, a tariff is a tax imposed on goods and services imported from another country. This is a tool used by governments as a trade barrier.

Tariffs increase the cost of importing goods and services. The increased cost makes acquiring the goods or services more expensive for the end-user, Investopedia explains.

Tariffs are fixed prices, meaning that their rates do not change, depending on the type of good or service. For example, a car has a fixed tariff of 10%, Investopedia notes.

Investopedia states that tariffs are a source of revenue for governments. They benefit the tariff-imposing country's producers at the expense of foreign trade.