What is a tar­iff?

Perfect Sourcing - - Cover Story -

Tar­iffs are bor­der taxes charged on for­eign im­ports. When a gov­ern­ment or eco­nomic bloc (such as the EU) im­poses a tar­iff on a par­tic­u­lar prod­uct, im­porters pay the levy as a per­cent­age of the to­tal value of the prod­uct to the cus­toms agency of that coun­try, at the point of en­try. They are im­posed to in­crease the price of for­eign goods to make do­mes­tic pro­duce cheaper in com­par­i­son, with the aim of protecting lo­cal firms from global com­pe­ti­tion. Ac­cord­ing to tar­iff sup­port­ers, this can help to save jobs that might oth­er­wise go over­seas.

Econ­o­mists usu­ally agree higher tar­iffs are coun­ter­pro­duc­tive. While they can pro­tect jobs in cer­tain in­dus­tries, they also tend to raise the price of goods for con­sumers and sti­fle in­no­va­tion.

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