tariff

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Related to customs duty: Excise duty, Customs tariff

tariff

tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic industries from foreign competition. For that reason, protective tariffs, as they are often called, are opposed by advocates of free trade. See also protection.

Modern Tariffs

Those customs duties that are still imposed today are usually either one of two types—specific duty, a tax levied on the quantity, whether by weight, size, or number, of the goods; or ad valorem duty, a percentage of the foreign or domestic price. The ad valorem duty is generally considered to be preferable but more difficult to levy, requiring complex procedures to determine the value of goods. Specific duties are best applied for protectionist purposes, since their size varies inversely with the prices of imports. For example, an import taxed at $5 per ton, and costing $100 per ton, may have an effective duty of 5%. However, if its price drops to $80 per ton—a threat to domestic producers—the effective duty may rise to more than 6%. Certain tariffs are also designed to offset dumping.

History

Evolution of Tariffs

Tariffs have been used by governments since ancient times, although they were originally sources of revenue rather than instruments of state economic policy. Early customs duties consisted of payments for the use of trade and transportation facilities, including ports, markets, streets, and bridges. By the 17th cent., however, they came to be levied only at the boundary of a country and usually only on imports. At the same time, European powers established special low tariff rates for trade with their possessions; such systems of colonial preference formed the basis of the trading patterns that developed in the 17th and 18th cent. (see mercantilism and Navigation Acts).

Although the free trade movement in the early 19th cent. discouraged the use of tariffs, a new system of trade relations known as imperial preference developed in the late 19th cent. Great Britain and France, in particular, used preferential tariffs to organize the flow of foodstuffs and raw materials from their colonial dependencies and to regulate the export of domestic manufactured products into those areas. Other European nations retaliated by raising their tariffs, and a period of relatively high protective tariffs lasting through the Great Depression followed.

Trend toward Free Trade

Since World War II the trend has been away from tariffs and in favor of freer trade. Through instruments such as the most-favored-nation clause and the reciprocal trade agreement, two nations may agree to lower their respective tariff barriers. More comprehensive agreements, such as those of the European Union and other customs unions, lower or even eliminate tariffs among groups of nations. Finally, the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have since the 1950s sponsored a number of initiatives for lowering the customs duties of most major trading nations. The United States has participated in the movement toward freer trade by lowering its customs duties from the high rates of the Hawley-Smoot Tariff Act (1930); by playing an instrumental role in the several GATT tariff initiatives, including the Uruguay round (1986–93), which created the WTO; and by signing (1992) the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Under the Trump administration, however, the United States pursued a quasimercantalist approach to the balance of trade and imposed tariffs on a number of its major trading partners in an attempt to win trade concessions; the tariffs generally led to the imposition of equivalent foreign tariffs on U.S. trade.

Bibliography

See T. B. Curtis, The Kennedy Round and the Future of American Trade (1971); H. G. Johnson, Aspects of the Theory of Tariffs (1971); H. R. Nau, ed., Domestic Trade Politics and the Uruguay Round (1989).

The Columbia Electronic Encyclopedia™ Copyright © 2022, Columbia University Press. Licensed from Columbia University Press. All rights reserved.
The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Tariff

 

a systematized schedule of customs duties on commodities transported across an international boundary.

The tariff was introduced in the countries of Western Europe in the 17th century. A tariff contains the name and classification of the commodities subject to assessment, the rates of duty, the methods of assessment, a list of duty-free goods, and a list of items that cannot be imported, exported, or sent through the country in transit.

Different countries use different classifications of commodities in their tariffs. In consonance with the convention signed by 13 states in Brussels in 1951 with respect to the Brussels Nomenclature, many capitalist countries—the Common Market countries, Sweden, Switzerland, and Japan—classify commodities in terms of their application. A few capitalist countries further classify commodities in terms of the substance from which the commodity is made (animal, vegetable, or mineral) or in terms of the degree to which the commodity has been processed (raw materials, semifinished products, and finished products).

In terms of rate structure, a tariff may be a single tariff, with only a single column of rates, or a compound tariff, with two or more columns. With a single tariff, the same rates are imposed on all commodities imported, no matter what the country of origin. Bolivia, Mexico, and Panama still use a single tariff. With a compound tariff, the same commodities may be assessed at several different rates. Most capitalist countries—for example, the USA, Canada, France, Great Britain, the Federal Republic of Germany (FRG), and Japan—use this kind of tariff (seeDIFFERENTIAL TARIFF). The imperialist countries and monopolies use differential tariff rates and, in general, an aggressive tariff policy in order to force certain other states to make concessions in foreign trade. Japan, for example, imposes compound rates of duty that are equivalent, on the average, to 19 percent of the value of the commodities—rates higher than those imposed by Great Britain, the FRG, and France. Japan has thus been able to erect tariff barriers against the import of commodities that would compete with its own.

The capitalist countries also make use of unilateral, multilateral, and mixed tariffs. Unilateral tariffs are those established by one country alone, acting unilaterally, and multilateral tariffs are those established by agreement among the countries concerned, such as the USA, Italy, and France. The rates of duty specified in a multilateral tariff are generally lower than those specified in a unilateral tariff. Some countries, such as Canada and India, use a combination of both, that is, a tariff with one or more columns of unilateral rates and with one or more columns of rates set by agreement with other countries. For example, Canada can thus impose the highest general rate of unilateral duty on the commodities of countries with which it has no trade agreement and, instead, give preferential rates to commodities imported from Great Britain and the other Commonwealth countries. The British tariff of 1970 had one column of maximum rates and another column of preferential rates, the latter for Commonwealth countries, Ireland, Common Market countries, and the members of the European Free Trade Association. For third parties, it set the highest rates for finished products, lower rates for semifinished products, and the lowest rates for raw materials and foodstuffs. For many raw materials and foodstuffs, duties are not levied at all.

Many developing countries establish highly differentiated rate structures in their tariffs. For example, they may impose low rates on imports of much-needed machinery, equipment, and certain kinds of industrial raw materials and foodstuffs. By the same token, they may set extremely high rates for luxury goods, such as cars, and for items they themselves produce, such as yarn, fabrics, and footwear.

The tariffs of the USSR and the other socialist countries are considerably more liberal. In 1961 the average tariff rates in the USSR were two to three times lower than those of the USA, France, the FRG, and other capitalist countries. The USSR has established concessions for goods imported from a number of neighboring countries. It has unilaterally introduced duty-free trade with the developing countries of Asia, Africa, and Latin America.

L. I. TUL’CHINSKII

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.

tariff

[′tar·əf]
(communications)
The rate charged by a communications common carrier for the use of a specified service or facility.
(industrial engineering)
A government-imposed duty on imported or exported goods.
McGraw-Hill Dictionary of Scientific & Technical Terms, 6E, Copyright © 2003 by The McGraw-Hill Companies, Inc.

tariff

1. 
a. a tax levied by a government on imports or occasionally exports for purposes of protection, support of the balance of payments, or the raising of revenue
b. a system or list of such taxes
2. Chiefly Brit
a. a method of charging for the supply of services, esp public services, such as gas and electricity
b. a schedule of such charges
3. Chiefly Brit a bill of fare with prices listed; menu
Collins Discovery Encyclopedia, 1st edition © HarperCollins Publishers 2005

tariff

A schedule of rates for common carrier services.
Copyright © 1981-2019 by The Computer Language Company Inc. All Rights reserved. THIS DEFINITION IS FOR PERSONAL USE ONLY. All other reproduction is strictly prohibited without permission from the publisher.
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