A customs tariff is a system through which goods and products exported or imported between countries are assessed, and related import taxes are applied. The purpose of customs tariffs is to balance international trade and bolster the domestic economy.
Tariffs are categorized into two types:
- Import tariffs: These tariffs are imposed when goods are imported into a country. For instance, if a nation imports a product, it incurs a tax (tariff) based on a certain portion of the product’s value.
- Export tariffs: These tariffs are applied to goods and products exported from one country to another. This tax serves to promote domestic products and regulate competition in foreign markets.
Customs tariffs are determined using the international customs code system, often referred to as the Harmonized System Code (HS Code). Each tariff code specifies details about the product, such as ingredients, weight, volume, origin, destination, characteristics, and standards. Based on these codes, tax tariff rates are determined. These rates can vary based on factors such as the type of goods, country of origin and destination, trade agreements, government policies, and other considerations.
Governments utilize tariffs as tools to manage their trade. These adjustments can be either supportive, encouraging domestic production, or restrictive, aiming to limit imports. Moreover, certain countries may apply preferential tariffs to nations with which they have trade agreements.”