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What is a Customs Tariff?

Customs tariffs are assessed on goods imported from other countries.
Goods that cross international borders are typically subject to customs inspections.
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  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 September 2014
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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.

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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.

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indemnifyme
Post 4

@sunnySkys - Maybe customs tariffs make sense for businesses, but I don't think individual consumers should have to pay a tariff if they order something from out of the country.

It just seems unfair to me. You already paid for the item and the shipping. Why should you have to pay just to bring the item into the country? I don't think that a few individual consumers ordering things off the Internet are going to make a big difference in the economy.

Now, when a company orders a bunch of stuff to sell wholesale here in the United States, that's a whole different story!

sunnySkys
Post 3

I think customs tariffs to reduce foreign competition are a great idea. We already outsource so many of our jobs, at least we can do something to protect American industry.

I also don't really think that customs tariffs would result in high prices. There is already enough domestic competition in most industries that one company couldn't just raise the prices artificially because there isn't any foreign competition.

lonelygod
Post 2

I often order goods from abroad as I am a bit of a collector. Unfortunately that means I am often stuck paying customs duty to get my goods. Usually the goods are held at the post office until I can make it to pay the fees in person. It is a bit time consuming, but there really is no choice but to pay.

Most countries give you a guideline, and things that are gifts or purchases under a certain amount usually come in free of a customs tariff. A good way to save cash is to break up your shipments and get them sent so that you can avoid the customs fees. It really is a balance of shipping costs verses customs tariffs when doing this.

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