What is a tariff?

A tariff is defined as a tax imposed on imported goods. This financial charge is levied by a government when goods are brought into the country from abroad, making it more expensive for foreign products to compete in the domestic market. The primary purpose of a tariff is to protect local industries by encouraging consumers to buy domestically produced goods, thereby potentially enhancing the economy of the nation imposing the tariff.

In addition to protecting local businesses, tariffs can also generate revenue for the government. By increasing the price of imported goods, tariffs can influence trade balances and affect consumer choices. While it can create opportunities for local producers, it might lead to higher prices for consumers depending on the reliance on imported products.

The other options do not accurately reflect what a tariff is: a quota regulates the amount of goods that can be traded, regulatory standards pertain to the specifications required for shipments, and agreements to trade services do not involve taxation of goods.