tariffing

Tariffing is the process by which a government imposes tariffs on goods crossing its borders. A tariff is a tax or duty levied on imports (and, less commonly, on exports) that raises revenue for the state and can alter the price and flow of trade. Tariff policy is used to protect domestic industries, influence employment, and address balance-of-payments concerns, while also serving as a bargaining instrument in international relations. Tariff schedules specify the rates by commodity, country of origin, and whether a preference applies.

Tariffs come in several forms. Ad valorem tariffs are assessed as a percentage of the goods' value; specific tariffs are fixed amounts per unit; mixed tariffs combine the two. Tariff-rate quotas allow a certain quantity to enter at a low rate, with higher duties for amounts beyond that quota. Tariff escalation describes a pattern where higher rates apply to finished goods than to raw materials or intermediate goods.

The effects of tariffing include higher import prices, reduced consumer welfare, and altered production incentives for domestic firms. Tariffs can raise government revenue and promote local employment in protected sectors, but may also trigger retaliation, higher costs for exporters, and inefficiencies from protected monopolies. The net impact depends on tariff design, elasticities of demand and supply, and the structure of the broader economy.

In the international system, tariffing is governed by rules and agreements under the World Trade Organization (WTO). Members engage in binding tariff commitments, and may grant preferential rates through regional agreements. Governments may also deploy tariffs as temporary safeguards, anti-dumping duties, or during trade disputes. Tariff policy interacts with non-tariff barriers and broader macroeconomic goals, making tariffing a central and often debated tool of trade policy.