Introduction: Anything but a tariff

Governments have a range of tools at their disposal to influence an economy’s production sectors. Tariffs are one of the oldest policies available to a trading country, providing a revenue stream from imports in the days before income and consumption taxation became popular ways to fund government activities. But the effects of tariffs and their value to the country as a policy depends a lot on the country’s influence, more specifically how influential the country is on global product prices. If the country is too small for either its own domestic demand or supply to influence prices in the broader world, then tariffs are the worst policy in the toolkit, and a wise government will choose something else every time.