Quick Tip on Effects of Tariff on Imports (Macro - International Trade)

This video gives you a step-by-step analysis of the effects of tariff imposed on imports.

To understand the diagram in this video, it is advisable to have a quick recap on Consumer and Producer Surplus which is also available in another recorded video.

Focus is to analyze how the loss of Consumer Surplus is redistributed to various sectors of the economy such as Producers (in the form of increase in Producer Surplus) and the Government (in the form of tax revenue). The deadweight loss from the imposition of tariff is also derived.

Tips: Is it necessary to draw the tariff diagram just to show the fall in imports? No, the diagram is required only if it is meant to show the impact it has on the economy such as the deadweight loss or effect on consumers or producers.