Tariffs on Exports and Imports

Customs tariffs are taxes levied on imported goods, and sometimes on exported merchandise. Tariffs are a way for governments to collect revenues.  Tariffs are also used to protect domestic industries by imposing duties (taxes) on foreign import. Tariffs help to regulate the amounts and types of products flowing in and out of a country.  Tariffs are often associated with protectionism, the economic policy of restraining trade between nations.  A tariff is a cost or duty imposed on imports to raise their price which makes them less attractive to domestic consumers and as a result protects domestic industries.

Shortly after World War II, an ad-hoc group of countries formed the General Agreement on Tariffs and Trade (GATT) to address the restrictions on trade created by high tariff rates in countries throughout the world. This organization was formed with the express goal of reducing or eliminating tariffs on imported goods. In the years since GATT was formed, a number of agreements have reduced or eliminated tariffs charged by countries. GATT was the precursor to the World Trade Organization (WTO), and its various tariff reduction and elimination agreements have been incorporated into the WTO organization structure.

The World Customs Organization, an intergovernmental organization, developed the Harmonized Commodity Description and Coding System (generally referred to as the "Harmonized System" or simply "HS"), a multipurpose international product nomenclature. It comprises about 5,000 commodity groups, each identified by a six-digit code. More than 176 countries and economies use the HS as a basis for customs tariffs, as well as for collecting international trade statistics.

The Harmonized System is a universal economic language and code for goods and a tool of international trade. In addition to contributing to the harmonization of customs and trade procedures, the HS is used by governments, international organizations, and the private sector for purposes including:

• Establishing tax or tariff rates; 
• Developing specific trade policies; 
• Monitoring and controlling imports of certain types of goods;
• As a method of determining and controlling the dollar amount of imports from certain countries; 
• For establishing freight tariffs;
• Gathering transport statistics; 
• Monitoring price on imports; 
• Establishing quota controls on certain imports; 
• For economic research and analysis;
• Taxes; 
• To facilitate embargos on certain imports or on imports from certain countries 

A trade embargo is a government law or policy that prohibits or restricts the importation or exportation of goods. Trade embargoes are typically motivated by political, economic, moral, or environmental reasons. They are an economic and political tool used as a form of protest against another country's internal customs, practices, or laws. 

In theory, embargos are geared to "punish" a country that has a disputable issue with a government. There are broad issues of free trade and national sovereignty involved in trade embargoes. Embargoes range from specific commodities to all goods imported from or exported to a specific country. It is advisable to review embargo information on a country and commodity specific basis to avoid non-compliance with government laws. Resources about import and export tariffs include:

• U.S. Bureau of Export Administration; 
• U.S. Department of Commerce, International Trade Administration; 
• U.S. Customs Service; 
• World Trade Organization; 
• World Customs Organization; 
• International Chamber of Commerce; 
• Customs Brokers; 
• Country Consulates and Embassies 

Edited by Michael Dennis, author of "Credit and Collection Handbook."   Mr. Dennis is a consultant and can be reached by email at mcdennis13@yahoo.com with questions, comment or business inquiries.