Tariffs and subsidies are both types of <u>incentives.</u>
Tariffs and subsidies are one of the most types of economic incentives. Both incentives are geared towards developing the local economy.
<h2>Further Explanation</h2>
Tariffs are created to protect local industries, especially industries that are in their early stages of development.
Tariffs are used for some many reasons and some of these reasons include:
- To raise revenue
- To protect domestic employment
- To protect local consumers
- To protect infant industries from foreign competition
- Also as a Retaliation strategy
There are many types of tariffs but the 2 main types the government imposed on imported goods include:
- Ad valorem tax: deals with the percentage of the value of goods or products
- Specific tariff: it is a tax levied that depends on a certain fee per product quantity or the weights of an item.
Subsidies are financial assistance that the government offers businesses. Subsidies are used to support businesses to boost their operations, particularly businesses that the government has interest in.
<u>For Examples</u>, one of the common subsidies in the United States is Agricultural subsidies whereby the federal government gives out billions of dollars to support farmers.
Some other types of US government subsidies also include
- Health care
- Environmental
- Export
- Ethanol
- Oil
- Housing
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KEYWORDS:
- incentives
- tariffs
- subsidies
- types
- government
