Explain how tariffs can harm and in some instances benefit consumers in an economy.

Explain how tariffs can harm and in some instances benefit consumers in an economy. Include in your discussion why governments impose tariffs.

The reason why tariffs are charged are because it limits imports of goods and services (which raises the prices); protects domestic producers; and in regards for retaliation for unfair trade practices by partnered countries (2021).  They are custom taxes in which the government can levy on imported goods.  On a daily basis, they help to shape the world market.  They are used to control trade.  It is used because they want to decrease the need for imports and raise the need for domestic products.  Governments impose tariffs to protect local industries from foreign competition due to consumers choosing imported products and services at a cheaper price (2020).  Tariffs are used to reduce consumption of undesirable goods and provide protection for domestic industries and the domestic workers.

Tariffs can harm consumers by:

·         Increasing the price of imported goods

·         Leads to net loss in production

·         Loss in jobs

·         Low levels of income

·         With high prices, consumers tend to buy less of goods and services

·         Hurting relationship with other countries

·         Discourages competition which leads to a decrease in product quality

·         Leads to a net loss in economic welfare

·         Tariffs are taxes that consumers must pay

·         Leads to shortage of goods and services

Benefits are: