A customs tariff is a tax assessed by a government on goods that are moved across an international border crossing or port. Customs tariffs typically do not apply to domestic goods. The charge levied for a customs tariff varies from country to country. While customs tariffs usually fluctuate for every good, most tariffs are assessed as a percentage of the good’s overall declared value.
Goods that cross international borders are typically subject to customs inspections. When a good arrives at a port or border crossing, a customs officer generally examines it. He or she then levies any applicable customs tariffs. A good cannot be carried across a port or border crossing until the customs tariff has been paid. Some individuals seek to avoid paying customs tariffs by illegally smuggling goods across international borders.
Most countries use harmonized tariffs schedules to determine the amount of taxes that will be assessed on imported products. One commonly used standard is the Harmonized Commodity Description and Coding System, which is maintained by the World Customs Organization. This system is internationally standardized, and it uses names and numbers for classifying traded products. When evaluating the amount of an overseas tariff rate, country-specific tariff guidelines should be reviewed.
A customs tariff can include an import tariff and an export tariff. An import tariff is a tax levied on products or goods that are entering a country while an export tariff is a tax imposed on products or goods that are leaving the country. Export tariffs are usually assessed less often than import tariffs.
Countries may impose customs tariffs for political reasons. One primary reason is to protect domestic goods from foreign competition. For example, if a country believes a product is experiencing significant foreign competition, the country may impose a customs tariff on any imported versions of the product. The tariff can help limit the number of imported products brought into a country from other nations. As a result, the domestic product may become less expensive and more likely to be purchased by consumers.
Customs tariffs can have economic impacts on countries. Countries that have tariffs imposed on them may realize job losses if their businesses are no longer able to compete in foreign markets. On the other hand, domestic producers in a country that imposes a tariff may benefit because competition is reduced. In this scenario, prices and sales may also increase. Although this may seem beneficial for the tariff-imposing country, domestic consumers may ultimately end up paying higher prices.