1. The Effects of a Tariff... Tariffs are taxes on imported goods.
Tariffs raise the price of imported goods above the world price by the amount of the tariff.

2. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply
Price with tariff
Q2S
Q2D
Tariff
World price
Price without tariff
Q1S
Imports with tariff
Q1D
Domestic demand
Quantity
of Steel
Imports without tariff 31

3. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply
Consumer surplus
before tariff
Producer surplus
before tariff
Price without tariff
World price
Domestic demand
Q1S
Q1D
Quantity
of Steel
Imports without tariff 31

4. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply A
Consumer surplus
with tariff B
Price with tariff
Tariff
Price without tariff
World price
Imports with tariff
Domestic demand
Q1S
Q2S
Q2D
Q1D
Quantity
of Steel
Imports without tariff 31

5. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply C G
Producer surplus
with tariff
Tariff
World price
Imports with tariff
Domestic demand
Q1S
Q2S
Q2D
Q1D
Quantity
of Steel
Imports without tariff 31

6. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply E
Tariff revenue
Price with tariff
Tariff
Price without tariff
World price
Imports with tariff
Domestic demand
Q1S
Q2S
Q2D
Q1D
Quantity
of Steel
Imports without tariff 31

7. Imports without tariff
The Effects of a Tariff...
Price
of Steel
Domestic supply A D F
Deadweight loss B
Price with tariff C E
Tariff
Price without tariff
World price G
Imports with tariff
Domestic demand
Q1S
Q2S
Q2D
Q1D
Quantity
of Steel
Imports without tariff 31

8. Changes in Welfare from a Tariff
Before Tariff
After Tariff
Change
Consumer Surplus
A+B+C+D+E+F
A + B
- (C+D+E+F)
Producer Surplus G
C + G
+ C
Government
Revenue
None E
+ E
Total Surplus
A+B+C+D+E+F+G
A+B+ C+ E+ G
- (D + F)
The area D+F shows the fall in total surplus and represents the deadweight loss of the tariff.

9. The Effects of a Tariff
A tariff reduces the quantity of imports and moves the domestic market closer to its equilibrium without trade.
With a tariff, total surplus in the market decreases by an amount referred to as a deadweight loss. 30