Indonesian companies manufacture inexpensive yet well-crafted leather belts, handbags, shoes, and apparel. Subsidized by the Indonesian government, the companies begin dumping these products on the Italian and French markets. The Italians respond by taxing the products 70 percent, which would be considered a tariff in this instance.

Question

Quizplus · Accepted Answer

A tariff is a tax imposed by a government on imported goods. In this scenario, the Italian government's action of taxing the Indonesian products by 70 percent is a measure to protect its domestic industries from the cheaper imported goods, which is a classic example of a tariff.

Indonesian Companies Manufacture Inexpensive Yet Well-Crafted Leather Belts, Handbags, Shoes