Title: Economic Effect of Tariffs: Why Governments Impose Them
Headings: The Economic Effect of Tariffs
The Economic Effect of Tariffs
Impact on the Economy
Empirical Evidence
Effects and Examples

Content: Economic Effect of Tariffs: Why Governments Impose Them
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The Economic Effect of Tariffs
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Mike Moffatt
Professor of Business, Economics, and Public Policy
Ph.D., Business Administration, Richard Ivey School of Business
M.A., Economics, University of Rochester
B.A., Economics and Political Science, University of Western Ontario
Mike Moffatt, Ph.D., is an economist and professor. He teaches at the Richard Ivey School of Business and serves as a research fellow at the Lawrence National Centre for Policy and Management. our editorial process
Mike Moffatt
Updated July 12, 2019
Tariffs—taxes or duties placed on an imported good by a domestic government—are usually levied as a percentage of the declared value of the good, similar to a sales tax. Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. Impact on the Economy
Except in all but the rarest of instances, tariffs hurt the country that imposes them, as their costs outweigh their benefits. Tariffs are a boon to domestic producers who now face reduced competition in their home market. The reduced competition causes prices to rise. The sales of domestic producers should also rise, all else being equal. The increased production and price causes domestic producers to hire more workers which causes consumer spending to rise.