Tariff barriers: Tariff is very important instrument of trade protection. Tariff refers to the duties or taxes imposed on internationally traded products when they cross the national borders.
Tariffs: A tariff, simply defined, is a tax imposed by a government on goods entering at its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. Tariff rates are based on value or quantity or a combination of both. (Differences between Tax and tariffs)
On the basis of origin and destination of the goods crossing the national boundary tariff may be classified into
1. Export duties: an export duty is a tax imposed on a commodity originating from the duty levying country destined for duty leaving country.
2. An import duty is a tax imposed on a commodity originating abroad and destined for duty leaving country. When tariff is imposed on imported goods it is called import duties.
3. Transit tariff; when a product is exported to a country through another country. Then the tariff which is imposed by the middle country is known as transit tariff.
On the Bases of Quantification: In the United States, for example, the types of customs duties used are classified as follows:
(1) Ad valorem duties: Ad valorem duties which are based on a percentage of the determined value of the imported goods.
(2) Specific duties: a stipulated amount per unit weight or some other measure of quantity; and
(3) A compound duty: A compound duty which combines both specific and ad valorem taxes on a particular item, that is, a tax per pound plus a percentage of value.
