What Are Tariffs, and What Do They Do?

A tariff, at the most basic level, is a tax charged on goods or services as they move from one country to another. You may also see them referred to as a “customs duty,” as the term is often used interchangeably with “tariff.” Tariffs are typically charged by the country importing the goods. They serve two purposes: economically, they generate revenue for the importing country and protect home-based industries producing those same goods. Some tariffs, called protective tariffs, charge a higher tax on imported goods so the domestically produced versions of the same goods can be sold at a more competitive price.

In contrast to protective tariffs, revenue tariffs exist primarily to raise money on goods that are not produced domestically, allowing the government to invest in other resources. For example, nonprotective tariffs include import taxes on oil produced elsewhere, or products that are only produced in other countries.

What are two supposes of tariffs?