Understanding Tariffs and Their Impact

What is the primary purpose of a tariff?

• To reduce government revenue

• To increase the cost of domestic goods

• To protect foreign industries

• To make imported goods more expensive

Which type of tariff is based on a percentage of the value of the imported good?

• Fixed tariff

• Compound tariff

• Ad valorem tariff

• Specific tariff

What is a compound tariff?

• A tariff that combines a percentage of the value and a fixed fee per unit

• A tariff that is based solely on the value of the goods

• A tariff that only applies to luxury goods

• A tariff that is fixed per unit regardless of value

Why might a country impose tariffs on imported goods?

• To decrease government revenue

• To protect domestic industries

• To encourage foreign competition

• To lower the cost of imports

How did tariffs impact the US-China trade war?

• They eliminated trade barriers

• They increased prices on goods like smartphones

• They reduced the cost of electronics

• They had no effect on agriculture

What is one reason developing countries might rely on tariffs?

• To decrease public services

• To fund infrastructure projects

• To eliminate foreign competition

• To reduce government revenue

How can tariffs affect consumers?

• By reducing the variety of domestic products

• By increasing the cost of imported goods

• By making domestic goods more expensive

• By lowering the prices of imported goods

What is a potential negative effect of excessive tariffs on local businesses?

• Increased innovation

• Reduced competitiveness

• Lower production costs

• Higher export rates

What is one way countries can avoid tariffs?

• By increasing import taxes

• By reducing domestic production

• Through free trade agreements

• By imposing more tariffs

Which agreement replaced NAFTA to continue reducing tariffs between the US, Canada, and Mexico?

• European Union Agreement

• Asia-Pacific Trade Agreement

• United States-Mexico-Canada Agreement

• Trans-Pacific Partnership