Tariff facts for kids

A tariff is like a special tax that countries put on things (called goods) when they are moved from one country to another. This tax can be added to goods coming into a country (these are called imports). It can also be added to goods leaving a country (these are called exports). Governments usually use tariffs to make money. They can also use them to help local businesses.

Why Do Countries Use Tariffs?

Governments use tariffs for a few main reasons.

Making Money for the Government

One simple reason is to collect money. When goods are imported or exported, the tariff adds to their cost. This extra money goes to the government. It's like a fee for bringing items across the border.

Helping Local Businesses (Protectionism)

Another big reason for tariffs is something called protectionism. Imagine a country that makes its own shoes. If shoes from another country are very cheap, people might buy those instead of the local ones. To help the local shoe makers, the government can put a tariff on imported shoes. This makes the foreign shoes more expensive. Then, the local shoes look like a better deal, and people are more likely to buy them. This protects the local businesses from too much competition.

What is Free Trade?

Sometimes, countries agree not to put tariffs on goods traded between them. This special agreement is called free trade. When countries have free trade, it means goods can move between them without extra taxes at the border. This often makes goods cheaper for people to buy. It also makes it easier for businesses to sell their products in other countries.

Related Topics

• Customs
• Indirect tax
• Sales tax

Images for kids

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  Average Tariff Rate in USA (1821-2016)

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  Tariff Rates in Japan (1870-1960)

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  Tariff Rates in Spain and Italy (1860-1910)

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  Average Tariff Rates (France, UK, US)

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