Report: Understanding Tariffs and the Potential Effects of a 10% U.S. Tariff on The Bahamas
1. What Are Tariffs?
Definition
Tariffs are taxes imposed by a government on imported goods. They increase the cost of foreign products, often with the goal of:
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Protecting domestic industries
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Generating revenue for the government
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Balancing trade deficits
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Applying political or economic pressure
Types of Tariffs
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Ad Valorem Tariffs: A percentage of the value of the imported good (e.g., 10% of a $1,000 item = $100).
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Specific Tariffs: A fixed fee per unit (e.g., $50 per ton of steel).
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Compound Tariffs: A mix of both.
Purpose and Use
Governments use tariffs to:
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Shield local businesses from foreign competition
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Encourage consumers to buy domestic goods
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Respond to trade imbalances
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Retaliate against unfair trade practices