Tariff for a Small Country Applying a tariff of t dollars will increase the import price from PW to PW + t. The domestic price of that good also rises to PW + t. This price rise leads to an increase in Home supply from S1 to S2, and a decrease in Home demand from D1 to D2, in panel (a). Imports fall due to the tariff, from M1 to M2 in panel (b). As a result, the equilibrium shifts from point B to C.