How the Removal of Tariffs Would Impact Agricultural Trade

Tariffs are a type of tax that governments impose on imports for a variety of reasons, including a way to raise revenue and to protect domestic industries. This latter reason—protection—can come at a cost to domestic consumers in the form of higher prices. The resulting higher prices may stimulate or impede changes in the supply of goods, resulting in impacts on the global balance of trade called “distortions.” The World Trade Organization (WTO) was formed in 1995 in part to improve market access for trade by negotiating for its members the elimination of barriers, such as bans, that restricted trade by converting them to tariff equivalents. While these tariffs were intended to increase market access for agricultural products, they still can limit trade.