Question

Tariffs can be thought of as indirect: Multiple Choice subsidies to foreign producers. special taxes on domestic producers. subsidies to domestic consumers. subsidies to domestic producers.

Answer 1

Answer:

subsidies to domestic consumers

Answer 2

Answer:

The correct answer is letter "D": subsidies to domestic producers.

Explanation:

Tariffs are levies imposed on imports to promote domestic production and discourage the purchase of goods abroad. Imposing tariffs and quotas usually cause a trade war in which the country affected counterattacks by imposing taxes on the company that started passing tariffs.

Under such a scenario, tariffs could represent indirect subsidies to domestic producers because, at a certain level, the decrease in imports promotes domestic goods consumption.