A tariff is a tax or duty imposed by a government on imported goods. It increases the price of the imported good, making it less competitive compared to domestically produced goods.
Imagine you and your friends are going to a concert, but there's a limited number of tickets available. The organizer decides to charge an extra fee for each ticket bought from outside the city. This makes the out-of-town tickets more expensive and less attractive compared to local ones.
Protectionism: Protectionism refers to government policies that protect domestic industries by imposing barriers such as tariffs or quotas on imported goods.
Trade deficit: A trade deficit occurs when a country imports more than it exports, leading to an imbalance in international trade.
Smoot-Hawley Tariff Act: The Smoot-Hawley Tariff Act was enacted in 1930 and increased U.S. tariffs on thousands of imported goods, contributing to the Great Depression.
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