Which of the following situations would most likely encourage the European Union to impose tariffs on imports?

• A. To protect domestic industries from foreign competition
• B. To increase the supply of imported goods
• C. To promote free trade with other countries
• 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, typically used to influence trade flows and protect domestic economic interests.
2. Analyze each option in terms of tariff effects: Increasing supply of imports usually discourages tariffs, as tariffs raise prices and reduce imports; promoting free trade generally involves reducing tariffs, not imposing them; reducing government revenue is not a goal of tariffs, since tariffs generate revenue.
3. Focus on the option 'To protect domestic industries from foreign competition': Tariffs make imported goods more expensive, helping domestic producers compete by reducing foreign competition.
4. Recognize that imposing tariffs is a common policy tool used by governments or unions like the EU to shield local industries from cheaper or more competitive foreign products.
5. Conclude that the situation most likely to encourage the EU to impose tariffs is to protect domestic industries from foreign competition.