Question

Who gains and who losses from the imposition of a tariff on an imported goods? How can it be determined whether the net gain from the tariff exceeds the net loss?

Answer 1

With the imposition of tax on imported good, the price of the imported good increases which helps the domestic producers to compete against imported as good as the domestic producer good will be less priced than imported good. Also government would gain as they receive tax revenues.

Consumers lose because as they would have to pay more in order to buy imported goods.

We can find the net gain or loss through total surplus. With the imposition of tax if total surplus excess no tax total surplus then net gain would exceeds net loss.