What is the purpose of tariffs in international trade?

The purpose of tariffs in international trade is primarily to protect domestic industries by increasing the cost of imported goods. By imposing tariffs, governments make foreign products more expensive compared to locally manufactured goods. This increase in cost can lead consumers to prefer domestic products, which helps to support local businesses and industries. Tariffs can also be used to increase government revenue.

The mechanism works because, when tariffs are applied, importers pass the additional costs on to consumers, making imported goods less attractive both in price and accessibility. Consequently, domestic producers may find a more favorable market situation as they face less competition from foreign goods. This protective measure aims to foster economic stability and growth within a nation’s economy by ensuring that local industries are not easily undercut by cheaper foreign imports.

The other choices do not accurately reflect the primary function of tariffs in international trade, as they either promote an increase in imports or suggest a complete elimination of tariffs, which contradicts the very purpose of implementing them.