What is a "tariff"?

A tariff is a tax that a government imposes on goods imported from other countries, which raises the price that domestic buyers pay for those foreign products. Governments use tariffs for several reasons, including protecting local industries from cheaper foreign competition, raising government revenue, or as a bargaining tool during trade disputes with other countries, pressuring them into negotiations by threatening their exporters' access to the market.

A discount given to exporters describes an incentive to encourage selling goods abroad, essentially the opposite intention of a tariff, which restricts and taxes goods coming in. A kind of foreign currency is simply money issued by another country, unrelated to a tax on imported goods.

Even though tariffs are often framed as punishing foreign companies, the additional cost is typically paid, at least in part, by domestic businesses that import the goods and by everyday consumers who eventually see it reflected in higher retail prices.