A tariff is a tax levied on goods that cross national borders.
Most countries impose some sort of tariff on foreign goods.
If that sounds unfamiliar, you've probably seen a version of it at the airport: duty-free shops, where travelers can buy goods without paying local import or sales taxes.
Tariffs can also be used for political means to stop a country's consumers from buying another nation's goods and encourage them to shop locally.
So, how do tariffs work, and who pays for them?
Tariffs are mostly used to protect domestic industries by making foreign goods more expensive, though they can also bring in revenue for the government.
When the goal is to raise revenue, tariffs often apply to goods that aren't made locally, things with no domestic substitute.
For example, a country might impose a small tariff on imported wine to take advantage of steady demand and bring in some extra money.
A tariff levied for protection raises the price on foreign imports in order to support the domestic production of similar products.
If tariffs make a bottle of imported olive oil $15 when a similar locally made olive oil costs $10, well, which would you choose?
