Lagos High protection for agricultural commodities in the form of tariffs continues to be the major factor restricting world trade. The large differences in average tariffs across countries make it possible for farmers in one country to benefit from tariff protection while farmers in other countries lose income because of lower prices resulting from those tariffs. High average tariffs create barriers to markets for U.S. and other farmers.
Tariffs impose costs both in the country where they are applied and on other countries.
Tariffs tax all products that cross a border, thus raising prices within the country imposing the tariff. Higher prices affect supply because farmers respond by increasing output, and higher prices affect demand because consumers buy less. The effects of tariffs on domestic markets can also spill over onto world markets as the combined effect of more supply and less demand reduces imports. If the country imposing the tariff is a large importer, then world prices can fall. The global average tariff on agricultural products is 62 percent and is much higher than those on manufactured items.