A tariff is a tax imposed on imported goods, which raises their price in the domestic market, making them less competitive compared to locally produced goods.
A trade deficit occurs when a country imports more goods and services than it exports. This often leads to borrowing from foreign countries to finance the deficit, increasing foreign debt.
Comparative advantage occurs when a country can produce a good at a lower opportunity cost than another country, leading to more efficient trade and specialization.
A trade surplus occurs when a country exports more than it imports. Increased demand for its goods leads to higher demand for its currency, which causes the currency to appreciate.
Countries engage in international trade to access goods and services that they cannot produce efficiently or at all, allowing for greater variety and specialization in the economy.
