What is a tariff in international trade?
Answer
A tax on imports
A tariff in international trade is a tax imposed on imported goods.
Governments commonly calculate tariffs as a percentage of a product’s customs value, called an ad valorem tariff, or as a fixed amount per unit. Some tariff schedules combine both approaches. The charge is generally collected when goods enter a customs territory.
Tariffs can raise government revenue, protect domestic producers from foreign competition or support broader trade policy goals. They can also increase prices for importers, businesses and consumers, especially when imported inputs are difficult to replace.
A tariff is different from a quota. A tariff changes the price of imported goods, while a quota directly limits the quantity that may enter. Countries may use both measures, alongside standards, licensing rules and other trade policies.