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Apparently it imports exactly as much as is needed and does not build up a stockpile (would be nice if you could set it to make a stockpile though. If you instead buy manually, it will not import but use up your stockpile instead...
If you block import you get negative "severe shortage of" modifiers that are very brutal. And from the "Income" tooltip you can kinda see that you are actually paying for something. Still not quite sure what budget does then though
Edit: oh ok, Budget sets a maximum amount of money that is used to buy a good. If you reset it then it is unlimited.
Edit 2: And setting taxes on products apparently does not make you any money, instead it lowers demand (thus saving you money on goods you would have to import otherwise) at the cost of unrest (see unrest tooltip).