How Do Tariffs Maintain A Balance Of Trade?


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Arun Raj answered
Tariffs are one of the restrictive measures implemented by importing countries to curb irregular trade practices. Tariffs maintain a balance of trade by increasing the cost of imported goods and services. When tariffs are used, the price of the imported good increases and makes the domestic consumer a little wary about purchasing it. This enables the domestic producer to find market for his produce in his nation. The consumer would rather buy a quality domestic product at lesser price than the costly imported good.

Tariffs impose anti dumping sanctions for foreign goods sold below their domestic cost. Revenue levied as a result of tariff fills the coffers of the domestic government. Thanks to tariffs, you cannot export foreign companies to dump goods into the domestic market. It also aids the infant industries to optimize their sales.

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