Tariff

A tariff is a tax imposed on goods as they cross a national border, most commonly on imports. It can raise government revenue, protect domestic producers, or serve as a trade-policy instrument.

Ad valorem tax: A tax calculated as a percentage of a good’s value. Many tariffs use a percentage of the imported good’s customs value.
Consumer surplus: The difference between what consumers are willing to pay and what they actually pay. Higher prices caused by tariffs can reduce the benefit consumers receive from purchases.
Protective tariff: A tariff intended to shield domestic producers from competition by imported goods. This is the classic use of tariffs to give local industries a price advantage.
Import quota: A government-imposed limit on the quantity or value of a good that may be imported. Unlike a tariff, a quota directly caps imports rather than taxing each shipment.
Specific tax: A fixed tax charged per unit of a good, regardless of its price. Some tariffs charge a set amount for each unit imported.
Producer surplus: The difference between the price producers receive and the minimum price at which they would sell. Protected domestic producers may gain when tariffs raise the price of competing imports.
Revenue tariff: A tariff imposed chiefly to raise public revenue rather than protect domestic producers. Border taxes have historically provided governments with a direct source of income.
Export subsidy: Government financial support that lowers costs or raises returns for firms selling goods abroad. It encourages exports, whereas an import tariff makes foreign goods costlier at home.
Customs duty: A government charge assessed on goods when they pass through customs. Customs authorities assess and collect many tariffs at the border.
Deadweight loss: The loss of economic surplus caused when a policy prevents mutually beneficial transactions. Tariffs can suppress trade whose benefits exceed its costs, creating losses beyond transfers.

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