What are tariffs?

Tariffs are taxes imposed on imported goods. They serve as a way for governments to regulate trade, protect domestic industries from foreign competition, and generate revenue. When a country applies a tariff, it increases the cost of imported products, making them less competitive in comparison to locally produced goods. This can encourage consumers to buy domestic products instead of imports, thereby supporting local businesses and industries.

Understanding tariffs is crucial in international business as they can significantly impact pricing strategies, market entry, and overall business operations in the global marketplace. For businesses involved in importing and exporting, awareness of tariffs allows them to navigate trade regulations effectively and optimize their logistics and supply chain strategies.

The other options do not accurately reflect the definition and function of tariffs. Subsidies relate to financial support for domestic production, fees to international organizations concern membership or participation costs, and foreign investment refers to capital investment into businesses in another country, none of which describe the taxation of imported goods.