An import tariff on food will cause the world relative demand for cloth to decrease and the world relative supply for cloth to increase.
What is meant by import tariff ?
As a result of increased competition and an increase in the quantity of items available to home consumers, international trade enables domestic businesses to export their commodities. Despite the fact that all of these consequences appear positive, it has been asserted that free trade is not advantageous to all parties.
A tariff is essentially a tax. It is one of several trade policies that a nation can implement, but it raises the price that importers' customers pay. The customs office of the nation imposing the tariff is where tariffs are paid.
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