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Concept Version 6
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Costs of Trade

Tariffs

Tariffs

This image shows what happens to societal welfare when free trade is not enacted. Tariffs cause the consumer surplus (green area) to decrease, while the producer surplus (yellow area) and government tax revenue (blue area) increase. The amount of societal loss (pink area) is larger than any benefits experienced by the producers and government. Free trade does not have tariffs and results in net gain for society.

Source

    Boundless vets and curates high-quality, openly licensed content from around the Internet. This particular resource used the following sources:

    "EffectOfTariff."
    http://en.wikipedia.org/wiki/File:EffectOfTariff.svg Wikipedia CC BY-SA.

Related Terms

  • welfare
  • tariff
  • free trade
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