Tariffs and war debt policies are the factors caused Americans to buy fewer goods in the late 1920s than they had earlier in the decade.
What are Tariffs?
- A tariff is a tax imposed by a country's government or the United Nations on the import or export of goods.
- In addition to being a source of government revenue, import tariffs are a form of foreign trade regulation and a policy of taxing foreign products to encourage or protect domestic industries.
- Along with import/export quotas and other non-tariff trade barriers, protective tariffs are one of the most widespread tools of protectionism. Pricing is possible.
- Taxing imports means people are less likely to buy even if imports are more expensive.
- Instead, you should buy local products to boost your own economy.
- Tariffs therefore provide an incentive to expand production and replace imports with domestic products.
- Tariffs are intended to reduce the pressure of foreign competition and reduce the trade deficit.
- They have historically been justified as a means of protecting emerging industries and enabling industrialization through import substitution.
- Tariffs can also be used to correct artificially low prices for certain imports through "dumping," export subsidies, or currency manipulation.
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