At its core, a tariff is a tax. But instead of being a tax on income or property, it's a tax on goods imported from another country. Governments use tariffs for two main reasons: to raise money and to protect domestic industries from foreign competition. By making imported goods more expensive, tariffs can encourage consumers to buy products made in their own country.

This tool of economic policy is one of the oldest and most common ways countries regulate trade across their borders. It directly influences the flow and price of goods in the global marketplace.

Not all tariffs are created equal. They come in a few different forms, depending on how the tax is calculated. The three most common types are ad valorem, specific, and compound tariffs.

The term ad valorem is Latin for "according to value." This type is the most common kind of tariff. Specific tariffs are more straightforward for goods that are hard to value or whose prices change often. Compound tariffs, as you might guess, combine both approaches.

Tariffs have a long history. For centuries, they were a primary source of revenue for governments around the world. In the early days of the United States, for instance, tariffs were the main way the federal government funded its operations, long before income tax existed.

Historical documents often laid out these taxes in meticulous detail, specifying the rates for everything from spices to fabrics.

Over time, the role of tariffs has shifted. While still a source of income, they are now more frequently used as a tool to manage trade relationships and protect specific industries from global competition.