Tariff
Tariff is a tax or duty to be paid on a particular class of imports or exports. It is a form of regulation of foreign trade and a policy that taxes foreign goods to encourage or protect domestic industry. Tariffs are among the most widely used instruments of protectionism, along with import and export quotas.
History[edit | edit source]
The term tariff has its origins in the Arabic word ta'rif, which means "notification" or "announcement". Tariffs have been used throughout history to control the amount of foreign goods entering a country and to raise revenue. The first tariffs were used in the 18th century in Europe, and have since been used worldwide.
Types of Tariffs[edit | edit source]
There are several types of tariffs, including:
- Ad valorem tariff: A fixed percentage of the value of the good that is being imported. This is the most common type of tariff.
- Specific tariff: A fixed fee for each unit of the good that is imported.
- Compound tariff: A combination of the ad valorem and specific tariffs.
Effects of Tariffs[edit | edit source]
Tariffs can have several effects on a country's economy. They can:
- Protect domestic industries: By making foreign goods more expensive, tariffs can encourage consumers to buy domestic goods.
- Raise government revenue: Tariffs can be a source of revenue for the government.
- Reduce competition: By making foreign goods more expensive, tariffs can reduce competition for domestic industries.
However, tariffs can also have negative effects. They can:
- Increase prices for consumers: Because tariffs increase the cost of importing goods, they can lead to higher prices for consumers.
- Hurt domestic industries that rely on imported goods: If a country imposes tariffs on raw materials, it can hurt domestic industries that rely on those materials.
- Lead to trade wars: If one country imposes tariffs, other countries may retaliate with their own tariffs, leading to a trade war.
See Also[edit | edit source]
References[edit | edit source]
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