How do tariffs affect the price of imported goods?

Tariffs are taxes imposed by a government on imported goods, and they serve to increase the cost of those goods when they enter the importing country. When a tariff is applied, the importers often pass on the additional costs to consumers in the form of higher prices. As a result, the price of imported goods tends to rise, making them less competitive compared to domestically produced goods.

This mechanism reflects the intention of tariffs, which is often to protect local industries by making foreign products more expensive. By increasing the price of imports, tariffs can encourage consumers to buy locally produced alternatives, thus supporting domestic economy and employment. Consequently, the increase in price of imported goods due to tariffs significantly impacts market dynamics and consumer choices.