Which of these statements best describes tariffs?

The statement that tariffs are taxes imposed on imported goods accurately captures the fundamental nature of tariffs in international trade. Tariffs serve as a form of government revenue and are typically applied as a percentage of the value of the goods imported. By imposing these taxes, governments can influence trade patterns, protect domestic industries from foreign competition, and generate revenue for public expenditure.

In contrast, subsidies to local businesses directly support their financial capabilities without being classified as tariffs. Similarly, limits on the quantity of goods that can be imported pertain to import quotas, not tariffs. Lastly, while tariffs can impact free trade agreements by raising costs for imports, they don't facilitate their growth; instead, free trade agreements often aim to reduce or eliminate tariffs to promote more open trade. Thus, recognizing the role of tariffs as a tax provides clarity on their function in the broader context of international business.