Explanation:

The trade “balance” of a country shows the difference between what it earns from its exports and what it pays for its imports. If this number is in negative – that is, the total value of goods imported by a country is more than the total value of goods exported by that country – then it is referred to as a “trade deficit”.

A trade deficit means broadly can mean two things.

1.  Demand in the domestic economy is not being met by the domestic producers. For instance, India may be producing a lot of milk but still not enough for the total milk demand in the country. As such, India may choose to import milk.
2. Many a time a deficit signifies the lack of competitiveness of the domestic industry. For instance, Indian car manufacturers could import steel from China instead of procuring it from the domestic producers if the Chinese steel was decidedly cheaper, for the same quality.

More often than not, the trade deficit of a country is due to a combination of both these main factors.

Higher tariffs help in bringing down trade deficits. For instance, if cheaper milk and steel from New Zealand and China, respectively, was held off by India levying higher tariffs then the people most hurt would be Indian consumers of milk and steel – a number far in excess of the number of Indian producers of milk and steel. The consumers would have to either pay a higher cost for imported steel or use equally costly or poorer quality domestic steel or indeed, go without milk (at least the poorer consumers).