Final answer:
Tariffs act as taxes on imported goods and serve to reduce imports by making foreign products more expensive compared to domestic goods, thus aiding local industries by decreasing foreign competition.
Step-by-step explanation:
Tariffs are a form of protectionism, used by governments to shield domestic industries from the competition of foreign markets. By placing taxes on imported goods, tariffs raise the price of these goods, thus reducing imports and making domestic products more competitive within the local market. Although Tariffs can also be used to raise revenue or for humanitarian reasons, their primary function in the context of protecting domestic industries is to limit the influx of foreign goods, allowing local producers a better chance to grow and sustain their businesses.
In the context of international trade, the World Trade Organization (WTO) plays a critical role in negotiating agreements aimed at reducing trade barriers, which includes tariffs. While tariffs can aid in nurturing fledgling industries within a country, over time they can lead to inefficiencies if industries become too reliant on protection and fail to improve to stay competitive internationally.