Why does the federal government impose tariffs on imports?

• A. To protect domestic industries from foreign competition
• B. To increase the supply of imported goods
• C. To encourage consumers to buy more foreign products
• D. To reduce government revenue

Answer: (A)

Verified step by step guidance

1. Understand the purpose of tariffs: Tariffs are taxes imposed on imported goods, which increase the cost of these goods when they enter the domestic market.
2. Analyze the effect of tariffs on prices: By increasing the price of imported goods, tariffs make foreign products more expensive compared to domestic products.
3. Consider the impact on domestic industries: Higher prices on imports reduce foreign competition, allowing domestic producers to maintain or increase their market share.
4. Evaluate the effect on consumer behavior: Since imported goods become more expensive, consumers are less likely to buy foreign products and more likely to buy domestic alternatives.
5. Recognize the government's motivation: The primary reason for imposing tariffs is to protect domestic industries from foreign competition, not to increase supply, encourage foreign purchases, or reduce government revenue.