What are tariffs?
Tariffs are taxes placed on imported goods by a government or a supranational union. Occasionally, tariffs can be applied to exports as well. They generate government revenue and serve as a trade regulation tool, often to shield domestic industries.
Four main categories of tariffs are:
Ad valorem tariffs: These are calculated as a percentage of the good’s value. For instance, a 20% tax might be placed on $100 of goods.Specific tariffs: These are fixed fees based on the quantity of goods. For example, there might be a tariff of $5 per imported kilogram of sugar.Compound tariffs: These combine a specific duty and an ad valorem duty applied to the same imported goods. Both tariffs are calculated together to determine the total tax. For example, a country might place a tariff on imported wine at $5 per liter plus 10% of the