Tariffs are Costly Options

Nice Work! - In markets with a tariff, the price rises, the quantity demanded by U.S. consumers decreases, and the quantity supplied by U.S. producers increases, so U.S. imports decrease.

Well Done! - Tariff revenue equals imports multiplied by the tariff on each unit of the imported good.

The increase in the tariff increases tariff revenue and the decrease in imports decreases tariff revenue. When the percentage increase in the tariff exceeds the percentage decrease in imports, total tariff revenue increases.

Good Job! - U.S. producers win because they sell more at a higher price.

U.S. consumers lose because they pay a higher price, buy a smaller quantity, and pay tariff revenue to the government.

Society loses because the increased domestic production could have been obtained at a lower cost as an import and because less is bought at a higher price.