Transcript Tariff What is it? (The 3 R’s)

Tariff
What is it? (The 3 R’s)
Usually levied as a percentage of the declared value of the
good, similar to a sales tax
Unlike sales tax, tariff rates are often different for every good
and tariffs do not apply to domestically produced goods.
Article On Tariffs
• World Bank estimates that if all barriers to trade
such as tariffs were eliminated, the global
economy would expand by 830 billion dollars by
2015.
• Tariffs hurt the country imposing them and the
country imposed on.
• 2000 President Bush raised tariffs on imported
steel goods.
• If tariffs are bad for the economy, why do we
have them?
Definitions Needing to Know
• Harmonized Tariff System- Importers and
exporters have to determine the correct
classification number for a given product
that will cross borders
– Effect on imports and exports: People who
work with this must familiarize themselves
with the different classifications and use them
accurately
– Product classification example
Definitions Needing to Know
• Nontariff trade barrier: any measure other
than a tariff that is a deterrent of obstacle
to the sale of products in a foreign market.
• Quota: government-imposed limit or
restriction on the number of units that can
be imported.
• The U.S. has over 8,000 different tariff
classifications.
• United States engages in “managed” trade.
• Ukraine wool coat example.
Definitions Needing to Know
• Restrictive administrative and technical
regulations: Take form of antidumping
regulations, size regulations, and safety
and health regulations
Effects: Volkswagon.
Tariff Systems
• Provide either a single rate of duty for
each item applicable to all countries or two
or more rates, applicable to different
countries or groups of countries.
– Single column tariff: a schedule of duties in
which the rate applies to imports from all
countries on the same basis.
– Two-column tariff: General duties plus special
duties indicating reduced rates determined by
negotiations.
Tariff Systems
• Normal Trade Relations:
Agreed upon by convention.
Nations agree to apply their most
favorable tariff or lowest tariff rate to all
nations.
U.S. and NTR
Does not give NTR to North
Korea, Iran, Cuba, and Libya.