Final answer:
The statement that tariffs are always preferred to free trade is false. While tariffs do generate government revenue and protect domestic industries, they also cause higher costs for consumers and may lead to trade disputes. The statement is false.
Step-by-step explanation:
The statement that a "tariff" on imported products is always preferred to free trade because it generates government revenues in addition to restricting the imports is false.
While it is true that tariffs are taxes on imported goods and do generate revenue for governments and can protect domestic industries, the imposition of tariffs also has drawbacks.
These include potentially higher costs for consumers, retaliatory measures from other countries, and disruptions to the efficiency of global trade. Therefore, tariffs are not always preferred to free trade.
Tariffs serve as a trade barrier that governments may use to encourage or discourage trade. When a government wishes to protect domestic industries from foreign competition, they may impose tariffs which make imported goods more expensive and less attractive to consumers.
This can also happen as a response to what is perceived as unfair trade practices by other countries, such as dumping, where a country exports goods at prices lower than the home market or below the cost of production.
Trade barriers like tariffs are part of a larger conversation about trade policy where arguments for and against free trade are examined.
The World Trade Organization (WTO) often plays a role in negotiating reductions in trade barriers among member countries to promote freer trade and the associated economic benefits.
Hence, tariffs are one of several tools that can be used in trade policy, and their use is a subject of debate among economists and policymakers.