What is tariff?
A tariff is a tax imposed by one country on the imports of another, usually as a way to protect domestic production and employment. In addition to being levied on imports, tariffs can also be imposed on exports from one country to another in order to create an advantage for domestic producers or manage currency exchange rates.
Tariffs can also be used to generate revenue for governments, and they have historically been an important source of income for many nations. Tariffs are typically based on ad valorem taxes, which are calculated as a percentage of the value involved in the transaction.
Types of Tariff
There are different types of tariffs, including ad valorem tariffs, which are based on the value of the goods, and specific tariffs, which are based on the quantity or weight of the goods. Tariffs may also be classified as protective tariffs, which are designed to protect domestic industries, or revenue tariffs, which are primarily used to raise revenue for the government.