Tariffs are very much in the news right now.  What is a tariff?  A tariff is a tax on imports into a country imposed at the border.  Another way of looking at them is that a tariff is a tax on exports from one country into another since the country the tax is imposed upon is specified or singled out differently than other countries.  A tariff is not an embargo, which is a closing or moratorium of imports from or exports to another country.

Tariffs that are charged by one country are often different from tariffs imposed on other countries.  Also, tariffs may be different on certain classes of goods and services from the same country.  When you look upon taxes, and tax policy, taxes are used to discourage or promote different behaviors.  The tax is a cost and like other costs, individuals choose goods and services based upon cost and perceived or actual quality differences.  If quality is the same, the higher cost item will be avoided.  Therefore, a higher priced import caused by a tariff on that good or service will be avoided and a domestically produced one will be chosen.

Tariffs are typically set to protect nascent businesses or industries from competition as a part of industrial policy.  Tariffs also are used for strategic industries necessary for the defense of the country.  Both of these instances are intended to influence behavior, as are all taxes, but that's another topic.

Tariffs in the United States (US) in the 1800's were designed to protect the industrialization of the Northeastern states from, in particular, higher quality goods from England.  More recently, the Japanese have a high tariff on imported rice to protect it's domestic rice production.  Both are examples of a protective tariff, in the first instance one intended to protect native industry and in the second a strategically important defense staple: food.

Tariffs after World War II (WWII) were significantly reduced on imports into the US because the industries in America were the only ones not devastated by the world war.  Industries in America had nothing to fear from foreign competition.  The US could sell anything everywhere.  The tariffs imposed by other countries didn't matter to America.  In fact, the reduction in tariffs was considered a necessary methodology to avoid the mistakes following World War I that lead to WWII.

Tariffs on imports into the US should have been reduced long ago to equal those imposed on goods received from other countries.  Furthermore, American tax policy discouraged investment in new plants and equipment.  Since the US could sell anything everywhere, American quality, which had become the envy of the world, deteriorated at the same time.  Goods and services from the US were perceived as lower quality in other countries at a higher cost.

Tariffs are but one element of tax policy.  As countries shifted away from taxes based upon income and commenced imposing taxes on value added (the VAT), a method with the appearance of tariff neutrality developed.  America taxes on world wide income, while the rest of the industrialized world does not.  Consequently, a foreign company exporting to the US would not see a tax on the export for the declared value added.  The company would only have to pay an income tax, if there was any, and possibly a tariff, if there was one, at the US rate.  In this way other countries subsidized exports and placed American goods at a further cost disadvantage.

Tariffs imposed on US goods and services at an unequal rate has placed America at a competitive disadvantage worldwide.  An example of the results is visible across our northern border in Canada or the Atlantic Ocean in Europe.  Canada can afford to have a free national health system in large part because America is subsidizing it.  Likewise, France can give it's workers the entire month of August off because America is subsidizing it.  These are just examples of where the tariffs the US pays other countries goes, America may have vastly different priorities with what to spend tariff revenue on.

Tariffs are taxes, but there exist other, non-monetary impositions and subsidies on imports.  In addition to VAT and income tax differentials, rules and regulations and their interpretations may increase the costs of the goods and services making them non-competitive.  Quotas on imports have a tendency to impose a domestic demand greater than the supply of a good and service, and, ultimately, the price – even though there may be no actual or perceived quality differential.  Essentially, any action that effects the total cost of the product, effects the supply and demand equation.