Tariff (Customs)

Summary of Tariff (Customs)

A document issued by a nation’s customs authority principally for the purpose of specifying rates of duty to be applied on various imported products. A tariff customarily also includes quantitative restrictions (quotas) upon certain imports, preferential duties on products imported from specified nations, and administrative rules concerning valuation and entry procedures. A protective tariff is designed to discourage foreign imports; a revenue tariff is designed to raise money for the government. Most tariffs contain both protective and revenue elements.

Tariffs that apply the same rates of duty uniformly to imports of all countries are said to be general tariffs. Most nations, however, permit lower rates to some nations with which favorable trade agreements have been negotiated. Rates of duty on products of nations enjoying Most Favored Nation (read this and related legal terms for further details) status, for example, will be shown in a column apart from the higher general rates. In addition, special low rates of duty may be permitted on certain products of less developed nations. The rates on such products would be shown in yet another column within the tariff. Such tariffs are known as multiple-column tariffs inasmuch as several rates of duty might apply to a given product, depending upon the country of origin and other factors. Tariffs in which lower rates of duty accrue to products of some countries but not others are said to be preferential tariffs.

Duties within a tariff may be statutory (prescribed by law) or conventional (derived by negotiations with trading partners). The Tariff Schedules Of The United States (read this and related legal terms for further details), for example, contain both. The rates shown in Column 1 are statutory rates, enacted in the Tariff Act of 1930 (read this and related legal terms for further details). The rates in Column 2 reflect concessions granted to some nations in return for reciprocal concessions.

(Main Author: William J. Miller)