Why Does A Country Establish Tariff To Limit Its Trade?

Though, free trade has its own sweet advantages, a country imposes limits on trade for many reasons. Tariff or a tax on the imports is one such limit. Tariffs raise the cost of imported goods. Due to escalating costs of imported goods, the demand for domestic good arises. When this happens, the domestic supplier gets the boost and is able to find market for his goods inside the country. If there is a surplus, he can export them too. However his goods can be expensive in the market of the country he is exporting to because of the prevalent tariffs there. Revenue collected from tariffs is amassed by the domestic government.

Tariffs are a restriction to stop the foreign companies from bombarding their goods onto the domestic market. Consumers would think twice about paying more for imported goods when one gets the same domestic product, with an ideal quality at a lower price. It particularly helps infant industries to maximize their sales. It also helps in imposing anti-dumping sanctions for foreign goods sold below their domestic cost.

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