A Primer on Tariffs

Summary

This practice note discusses tariffs, which are taxes based on the value of imported goods as they enter a country. Tariffs are designed, typically, to restrict foreign imports, safeguard domestic jobs, reduce competition among local industries, and boost government revenue. Historically, tariffs were a significant revenue source for many countries, including the United States, where they were a primary federal revenue source until the late 19th century. In modern times, tariffs are used more selectively to protect domestic industries, achieve foreign policy objectives, or serve as leverage in trade negotiations.