Question

In: Economics

Why are tariff rates on agricultural products generally higher than tariff rates on manufactured products or...

Why are tariff rates on agricultural products generally higher than tariff rates on manufactured products or services?

Solutions

Expert Solution

Tariff is a type of tax that is imposed on a particular good or service that is imported from some other country.

Tariff is high on agricultural goods in order to protect the farmers from the foreign competition and to encourage production of food in the domestic country. This will lead to provide ample food quantity to the people of the domestic country and that too at low prices.

This will also provide raw material that is less costly to the domestic industries manufacturing food products.

But it is comparatively low on manufacturing products or on services in order to provide more choices to the consumers of the importing country.


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