Question

Washington's Plan of Government included a National Bank and protective tariffs. How do tariffs "protect" American companies?

a) Raise the price of foreign goods to make them more expensive than American goods
b) Lower the price so more people can afford goods
c) They raise the price of American goods so companies can make more money
d) They lower the price of American and foreign goods

Answer 1

Tariffs protect American companies by making imported goods more expensive and less competitive, encouraging consumers to buy domestically-produced goods.

Step-by-step explanation:

Tariffs are a form of taxation imposed on imported goods by a government. They can be used to protect domestic industries by making imported goods more expensive and less competitive in the market. By increasing the price of foreign goods, tariffs encourage consumers to buy domestically-produced goods, thus providing a market for American companies and protecting them from foreign competition.

For example, let's say there are two companies producing the same product, one in the United States and one in another country. If the foreign company can produce the product at a lower cost and sell it at a cheaper price, consumers may choose to purchase the foreign product. However, if a tariff is imposed on the foreign product, it will increase the price and reduce its competitiveness.

As a result, consumers may be more inclined to purchase the domestically-produced product, which benefits American companies. This protection from foreign competition allows American companies to thrive and grow, creating jobs, stimulating the economy, and promoting domestic industry.