We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is a Protective Tariff?

Patrick Wensink
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A protective tariff is a financial decision by a government to apply a tax on the importation of foreign goods. Many times, this tariff is used to inflate import prices in order to protect the value of domestic merchandise that can be produced in the home country. This type of tariff is considered a threat to free trade by some, but others claim its benefits are twofold. The first is keeping domestic money within its own economy. The second benefit is preventing inexpensive imports from destroying local business.

An example of a protective tariff is seen in the importation of oranges. Citrus fruit does not readily grow everywhere, and South American countries often produce massive quantities for export. If a country can produce oranges but can import them from South America cheaper than growing them domestically, a protective tariff might be applied. This tariff will inflate the price of the imported oranges so that they are equal to or higher than the price of domestic oranges.

Some argue that dealing with imports in this manner is unethical. They claim that the cost of shipping should be the only addition to an item's price. Applying protective tariffs, the argument states, threatens the idea of having free trade.

On the opposite end of the spectrum are two arguments in favor of protective tariffs. One is that it keeps money earned locally within the domestic economy. The idea being that if a man earns a paycheck from a local business, he should feed that money back into other local businesses, creating a support cycle. By purchasing less expensive imported goods, that man is not giving his money to domestic business but straight to foreign economies. This, in theory, creates a hollow economy that does more to support foreign business and less to support itself.

The second argument in favor of a protective tariff is that it prevents unfair import competition. This viewpoint states that if South American oranges were imported without a tariff and at a much lower cost than domestic oranges, consumers would purchase those over more expensive domestic oranges. This would put a strain on domestic orange growers and possibly put them out of business. In this case, a protective tariff is meant to level competition for domestic businesses.

Protective tariffs are controversial plans to deal with the importation of goods. Some see these import taxes as a necessary means of protecting a domestic economy. Others believe it is a threat to free trade.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Patrick Wensink
By Patrick Wensink
Patrick Wensink, a bestselling novelist and nonfiction writer, captivates readers with his engaging style across various genres and platforms. His work has been featured in major publications, including attention from The New Yorker. With a background in communication management, Wensink brings a unique perspective to his writing, crafting compelling narratives that resonate with audiences.
Discussion Comments
By Nepal2016 — On Jun 18, 2011

@horsebite - I agree that free trade is important. I don't want to keep other countries from selling their things here. I just want the same rules for all. And I agree that other countries should not face tariffs here in the U.S., as long as they do not put them on our products.

By horsebite — On Jun 17, 2011

@ Nepal and parkthekarma - To be fair, all countries place tariffs on some imported goods. So even if U.S. goods face tariffs, so do the goods of other countries coming into the U.S. in many cases.

I agree with you that a level playing field and free trade is very important, and I think all countries should work toward this.

By parkthekarma — On Jun 14, 2011

@ Nepal2016 - You are so right! I have worked for one of the "Big 3" for almost 30 years now, and it seems like our industry has been on the ropes so many times while more and more imported cars are coming in here. It started as just a trickle in the 60s and 70s, but now everywhere you look you see a foreign car. I know that we sell a lot of cars in Europe, but not every country opens their markets like we do.

I am very proud of the cars I make. I think our vehicles can compete everywhere, but we just need a level playing field to allow us a fair shot.

By Nepal2016 — On Jun 12, 2011

What annoys me about protective tariffs is they are often so one sided. It seems like Americans who oppose protective tariffs believe that all trade coming into the U.S. should be free, which is an admirable goal on paper, but it seems like we (the U.S) are the only ones playing fair.

Look at Japanese cars. They come over to American in droves, but then how many of our cars go there? And when they do, what kind of taxes and tariffs are put on them to make sure that only a small percentage of our stuff gets sold there? I'm all for fair trade but if it's going to be fair, let's make it fair!

Patrick Wensink
Patrick Wensink
Patrick Wensink, a bestselling novelist and nonfiction writer, captivates readers with his engaging style across various...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.