Ways Tariffs Are Charged:
Ad Valorem Tariff: This type of tariff is based on the value of goods being imported or exported. It's calculated as Product Price × Ad Valorem Rate.
Specific Tariff: Here, the tariff is applied to the quantity of goods, like per ton or box. It's calculated by: Quantity of Goods × Rate per Unit.
Compound Tariff: This is a mix of both ad valorem and specific tariffs, used when both value and quantity are considered for taxation.
Alternative Tariff: Sometimes, both ad valorem and specific rates are given for the same goods. When taxing, a higher (or sometimes lower) amount can be chosen.
Sliding Tariff: A sliding tariff adjusts depending on the price of the imported goods. As prices drop, the tariff rate rises, and vice versa, to help stabilize import prices.
Types of Tariffs Based on Trade Flow:
Import Duty: This is a tax applied by customs on goods coming into the country, paid by the importer. It's a standard way to tax foreign goods.
Export Duty: A tax on goods as they leave the country. This duty can increase export costs, making the goods less competitive abroad.
Transit Duty: This applies to foreign goods passing through a country on their way to another destination.
Special Cases and Different Treatments:
Most-Favored-Nation (MFN) Rate and General Duty:
MFN Rate: A lower rate applied to goods from countries with MFN agreements.
General Duty: A higher rate for goods from countries without such agreements.
Usually, the MFN rate is the default import tax rate.
Preferential Duty: Some countries offer reduced or zero tariffs to specific countries.
Reciprocal Preferential Duty: Applies in arrangements like the Commonwealth Preference System.
Non-Reciprocal Preferential Duty: Examples include agreements like the Lomé Convention.
Generalized System of Preferences (GSP):
Principles: GSP is based on universal, non-discriminatory, and non-reciprocal treatment.
Objectives: It aims to help developing countries by increasing their export revenue and boosting their industries.
Key Provisions: GSP covers eligibility rules for countries and goods, plus rules on origin.
Additional Import Surcharges:
Price Differential Tariff: Also called a sliding tariff, this is used when domestic products have a higher price than similar imports. To protect local industries, a tariff is added based on the price difference. This is common with EU agricultural products.
Anti-Dumping Duty: Under international trade rules, if goods are sold below domestic prices, this "dumping" is countered with a tariff to protect local industries. Criteria include significant harm to local businesses or barriers to starting new ones.
Countervailing Duty: Also called offset or compensatory duty, it's applied to goods that received government subsidies in their home country. Subsidies can include financial support or price assistance. Criteria for this duty include that the subsidies violate WTO rules and harm or threaten local industries or prevent new ones from starting.
