Release Message:  The imposition of a tariff on imports may reduce the relative internal price of that good. Authored by Lloyd Metzler.

Description:  In economics, the theoretical possibility that the imposition of a tariff on imports may reduce the relative internal price of that good. It was proposed by Lloyd Metzler in 1949 upon examination of tariffs within the Heckscher-Ohlin model.[2] The paradox has roughly the same status as immiserizing growth and a transfer that makes the recipient worse off.[3] The strange result could occur if the exporting country's offer curve is very inelastic. In this case, the tariff lowers the duty-free cost of the price of the import by such a great degree that the effect of the improvement of the tariff-imposing countries' terms of trade on relative prices exceeds the amount of the tariff. Such a tariff would not protect the industry competing with the imported goods.