Tariff
A tariff is a governmental tax imposed on imported or exported goods and services. It serves multiple purposes including protecting domestic industries from foreign competition, generating revenue for the government, and influencing trade policy.
Tariffs can be classified into two main types:
-
Ad valorem tariff: This is a percentage of the value of the imported good. For example, a 10% tariff on a product valued at $100 would result in a $10 tariff cost.
-
Specific tariff: This is a fixed fee based on a specific measurement, such as weight or quantity, rather than the value. For instance, a specific tariff might be $5 per kilogram of a particular imported product.
Tariffs can affect the prices of goods in the domestic market, influence consumer choices, and impact international relations by altering trade dynamics.
« Back to Glossary Index