How do tariffs effect the distribution of income between consumers, producers and the government?
Answer:
A tariff is essentially a tax that is placed on an imported or exported good. So, as with all taxes, it makes the costs of production more expensive, and it makes the costs of consumption higher. Both producers and consumers lose, because less of the good will be produced and sold and consumed.
The government, of course, gets the tariff revenue, but the overall loss to society can still be significant.
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