Question

Why are tariffs imposed?

Answer 1

Tariffs are taxes imposed on the imports by a country for providing protection to its domestic industries. Imposition of tariffs increases the price of imported goods in the domestic country. The rise in price discourages consumption of imported goods by consumers and thus, domestic industries are able to compete with imports from other countries. Tariffs may also be imposed on those imported goods which are socially undesirable. For example, in India, customs duty is imposed on imports of alcohol.