tariff

Tariff refers to a tax or duty imposed by a government on goods as they cross a border. Tariffs are primarily used on imports, but some systems also levy export tariffs or transit charges. They are typically specified in tariff schedules and applied according to product classification, often using the Harmonized System. Tariff rates may be ad valorem (a percentage of value), specific (a fixed amount per unit), or a combination known as a compound or tariff-rate quota when a quantity is taxed at one rate and additional quantities at another.

Purposes: revenue for the state, protection of domestic industries, stabilization of the terms of trade, and as a discretionary instrument in trade negotiations. They also influence exchange rates and inflation by altering domestic prices.

Administration: tariffs are collected at the border by customs authorities. Calculations depend on the customs value, the tariff code, and any preferential rates. Many countries apply Most Favored Nation (MFN) rates to all partners unless a preferential arrangement is in force, such as regional trade agreements or special-and-differential treatment for developing economies. Tariff-rate quotas allow a certain volume at low rates, with higher rates on beyond-quota imports.

Other related tools include anti-dumping duties and countervailing duties to counter unfair trade practices, rules of origin to determine eligibility for preferential tariffs, and non-tariff barriers that can serve similar protectionist aims.

International context: tariff schedules are negotiated and bound under the World Trade Organization framework. Tariffs are often cited in debates over globalization, with concerns about consumer prices, domestic efficiency, and potential retaliation.