Question

When a country must resort to tariffs for​ protection, the result is considered a​ "second best"​ solution, which means the tariff is not the most efficient action. This result occurs because

Answer 1

Tariffs will always cause deadweight losses to the markets. Tariffs are new taxes imposed on imported goods. When new tariffs are set (or any new tax) the market's equilibrium shifts, resulting in higher prices for the consumers and lower income for the suppliers. This economic inefficiency is called deadweight loss.