A tariff constitutes a tax or duty levied on imported goods ranging from raw materials to finished products collectible at the port of entry.
Key Characteristics:
- Ad valorem tariffs charge percentages of product values rather than fixed sums
- Quotas cap imports volumes from particular origins once limits are reached
- Preferential terms under trade deals lower tariffs for favored partners
Example:
During trade disputes, China and the U.S. increasingly exchanged retaliatory tariffs on major agricultural and industrial imports.
Takeaways:
Tariffs aim to protect domestic industries but risk sparking trade wars. They also raise costs globally and shift production. Exemptions and negotiations strive for balance of economic and geopolitical interests among nations.