Table of contents:
- What is a tariff?
- Why do governments impose tariffs?
- How will tariffs affect consumers?
- How will tariffs impact the Canadian economy?
What is a tariff?
A tariff is a tax applied to imported or exported goods. Importers pay tariffs when bringing products into a country, which can raise the final cost of those goods.
For example:
- If the U.S. imposes tariffs on Canadian goods, Canadian exporters will face higher costs to sell products in the U.S.
- If Canada retaliates with tariffs on U.S. imports, Canadian businesses will pay additional fees when bringing in American goods.
As a result, tariffs often lead to higher prices for consumers.
Why do governments impose tariffs?
According to Export Development Canada, governments use tariffs for three main reasons:
- Revenue generation – Tariffs act as a source of government income, similar to sales taxes.
- Protecting domestic industries – Higher tariffs on foreign products can encourage consumers to buy locally produced goods.
- Diplomatic leverage – Tariffs can be used as a political tool to influence trade policies and international relations.
Governments sometimes introduce tariffs to respond to economic or political
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