What are tariffs/custom duties?

Tariffs, also known as customs duties, are taxes that governments impose on imported goods. This financial charge serves several purposes, including regulating the volume of imports, protecting domestic industries from foreign competition, and generating revenue for the government. By raising the price of imported goods through tariffs, the government discourages excessive imports, encouraging consumers to buy locally produced items instead. This can also help safeguard local jobs and industries that could be negatively impacted by cheaper foreign goods.

The other options do not accurately reflect the definition of tariffs. Fees collected on exports do not exist in the same way as import tariffs. Subsidies for local businesses refer to financial support provided by the government to help domestic companies compete more effectively, which is distinct from tariffs. Lastly, costs incurred by manufacturers are operational expenses related to production and do not specifically pertain to the taxation of imported goods. Thus, the correct understanding of tariffs aligns with option B, highlighting their role as taxes specifically levied on imported items.