$ETH A tariff is a tax imposed by a government on imported goods or services. Its primary purposes are to protect domestic industries from foreign competition (protectionism) and to generate revenue for the government.

When a tariff is applied, the cost of imported goods increases, making them more expensive for consumers and potentially less competitive compared to domestically produced alternatives. This can lead to a shift in consumer demand towards local products. However, tariffs can also lead to higher prices for consumers, reduced variety of goods, and retaliatory tariffs from other countries, potentially sparking trade wars and hindering global economic growth. Different types of tariffs exist, such as specific tariffs (a fixed fee per unit) and ad valorem tariffs (a percentage of the good's value).