kamara5

you guys are correct that tariffs create a " subsidy" for domestic producers- giving them an advantage

but i would hesitate to answer the question ' why do they create inefficiencies' with the response " because domestic prices will go up " which seems to be the common conclusion in this thread.

but - for exam purposes - i think ' inefficiency' in this context ( an economic concept) refers to the idea that tariffs - due to the ' protection' they afford domestic producers - cause a certain hidden disincentive for them to use resources in the most efficient way possible. In other words, tariffs naturally reduce competition - competition forces firms to keep costs down, invest in " better and easier ways of doing things' etc etc.

So - tariffs foster inefficiency in domestic firms because it ' protects ' them from it. price increases are a result to be sure - but not necessarily the answer they'd be looking for

just my thots