Tariffs can be fixed (a constant sum per unit of imported goods or a percentage of the price) or variable (the amount varies according to the price). Tariffs on imports are designed to raise the price of imported goods and services to discourage consumption. The intention is for citizens to buy local products instead, thereby stimulating their country's economy. Tariffs therefore provide an incentive to develop production and replace imports with domestic products. Tariffs are meant to reduce pressure from foreign competition and reduce the trade deficit. They have historically been justified as a means to protect infant industries and to allow import substitution industrialisation (industrializing a nation by replacing imported goods with domestic production). Tariffs may also be used to rectify artificially low prices for certain imported goods, due to 'dumping', export subsidies or currency manipulation.
tarIffS can be fixed (a consTaNt sum per unit Of impOrted gOoDs Or A peRCEntage oF tHE price) or variAble (the amOuNt varies aCcOrdIng tO ThE priCe). taRiffs on IMpoRts are DesiGned to RaIsE The pricE of iMpoRtED gOodS ANd seRVicEs To diSCOuRage COnsuMptiOn. thE IntEnTion Is For cItizeNs tO buy locAl ProductS iNsTeAd, thEreby StimUlAtinG thEir COuNTry's EcoNOMy. tariFfS ThEreforE pRovIde an Incentive to DEveLOp ProdUction aND rEplacE impoRts WiTH DomesTIc productS. TARiffs are MEaNT tO reducE preSSure FrOm ForeIgn ComPetiTioN aND Reduce tHE tradE dEFiciT. theY havE HiStoricAlly been jUStifieD aS a means TO protect iNfAnT industrieS aNd to allow ImPort SUbSTItUtIOn indusTriAlISAtIOn (induStRiAlizing a nAtIOn by RepLAcIng ImporTed goODs wItH domestic pRoductION). tariFfs may alsO bE usEd to reCtify ARtificially low priCes foR ceRtAin IMpOrted goOdS, duE tO 'DUmpING', ExporT SubsIdIES oR CuRrency mANipUlaTIon.