tariffs

Tariffs are taxes imposed by a government on goods that cross its borders, most commonly on imports. They are collected at the point of entry by customs authorities. Tariffs can be ad valorem, calculated as a percentage of the imported value; specific, a fixed amount per unit; or a combination of both. Some tariff systems also use quotas, setting a lower rate for a limited quantity and a higher rate for imports beyond that quota (tariff-rate quotas). Special duties such as anti-dumping or countervailing duties may be added to address unfair practices by foreign producers.

The primary purposes of tariffs are to raise government revenue, to protect domestic industries from foreign competition, and to influence domestic prices and employment. They can also be used to signal policy objectives or to retaliate against the trade practices of other countries. Tariffs affect consumer prices, production costs, and the availability of goods. In general, higher tariffs raise import prices, reduce imports, and can lead to higher prices for consumers, though effects depend on supply and demand elasticities, substitution possibilities, and the structure of the domestic market.

Tariffs operate within an international framework. The World Trade Organization governs most tariff policies, emphasizing nondiscrimination among trading partners and the reduction of barriers. Countries may also pursue regional or bilateral trade agreements that lower tariffs among participants. Tariffs can provoke retaliation and trade frictions, influencing global trade patterns and economic welfare. Throughout history, tariff policy has been a central instrument in economic strategy, balancing revenue needs, domestic industry goals, and broader considerations of efficiency and equity.