Tariff with Home Monopoly Initially under free trade at the fixed world price P^W, the monopolist faces the horizontal demand curve (and marginal revenue curve) X*, and profits are maximized at point B. When a tariff t is imposed, the export supply curve shifts up since Foreign firms must charge P^W + t in the Home market to earn P^W. This allows the Home monopolist to increase its domestic price to P^W + t, but no higher, since otherwise it would lose all its customers to imports. The result is fewer imports, M₂, because Home supply S increases and Home demand D decreases. The deadweight loss of the tariff is measured by the area (b + d). This result is the same as would have been obtained under perfect competition because the Home monopolist is still charging a price equal to its marginal cost.