Tariffs

Introduction to Tariffs

Tariff, tax levied by a government on imports and exports. The money collected from tariffs is called a customs duty. Although tariffs are a source of government revenue, tariffs are also used as part of political and economic policies. For example, import taxes protect domestic manufacturing and agricultural industries from foreign competition by making imported items more costly.

Tariffs were originally used by governments to raise revenue. As industry grew and national economies formed in the 1500s and 1600s, tariffs were used mainly to protect domestic industry and achieve a favorable balance of trade-that is, to have more goods exported than imported. These uses of tariffs led to governments levying high and often discriminatory tariffs on hostile governments, while friendly governments were given preferential treatment. Peace treaties negotiated during the 1600s and 1700s by major European warring powers often contained provisions for reducing import duties. After 1700, virtually every treaty regulating commerce contained a most-favored-nation clause that obligated participating governments to extend their most favorable tariff policy to all nations.

The trend to increase tariffs continued in the 1800s and early 1900s and was particularly strong during the early years of the Great Depression (1930s). During the depression, however, some countries made a concerted effort to reduce tariff barriers. After 1934 the United States negotiated trade agreements that reduced some duties and provided for most-favored-nation status. For the history of tariffs in the United States, (see Tariff, United States).

After World War II tariff barriers continued to decrease with the establishment of the General Agreement on Tariffs and Trade (GATT) and the formation of regional customs unions, such as Benelux and the European Community (now called the European Union). These groups lowered tariffs among themselves and maintained a common tariff for nonmembers. World trade promotion through lower international tariffs and the removal of other obstacles continues to be fostered by the World Trade Organization (WTO), which took over GATT’s activities in 1995. Most trading nations are members of WTO.” (1)

GATT (General Agreement on Tariffs and Trade) and Europe

There is an entry on gatt (general agreement on tariffs and trade) in the European legal encyclopedia.

Resources

See Also

Further Reading

• Entry “GATT (General Agreement on Tariffs and Trade)” in the work “A Concise Encyclopedia of the European Union from Aachen to Zollverein”, by Rodney Leach (Profile Books; London)

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Notes and References

• Information about Tariffs in the Encarta Online Encyclopedia

Guide to Tariffs

History of the Tariffs

The following commentary about Tariffs in the Churchill Era is produced by the Churchill College (Cambridge): Taxes on particular classes of imports or exports.

Tariffs and the Laws of International Trade

Customs service enforcement

Gray Market Goods

Resources

See Also

Further Reading

• Information about Tariffs in the Encyclopedia of World Trade: from Ancient Times to the Present (Cynthia Clark Northrup)