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A tax on imports or exports.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


A tax that a country imposes on its imports and, occasionally, exports. A duty exists to make an import more expensive and to thereby encourage people to buy goods produced in their own country. Proponents of their use argue that duties discourage outsourcing of jobs to other countries and make the country more self-sufficient, but most economists agree that they are economically inefficient and some contend that they may ultimately harm the people they are intended to help. A duty is also called a tariff. See also: WTO, International trade, Globalization.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A tax levied on a good imported into a country. In most instances, tariffs are intended to make imported goods more expensive and thus less competitive with domestic products. Also called duty. See also General Agreement on Tariffs and Trade, trigger price.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


  1. a TAX (import duty) levied by a country on IMPORTS of products from foreign countries which may increase their prices in the domestic market. There are two main types of tariff;
    1. an ad valorem duty which is levied as a fixed percentage of the value of the product;
    2. a specific duty which is levied as a fixed sum of money per physical unit of the product.

    Governments impose tariffs primarily to protect domestic industries from overseas competition, in order to maintain a local production base and to prevent job losses. Additionally, governments use tariffs to assist the BALANCE OF PAYMENTS, and also as a means of raising revenue.

    Since 1950, the tariffs which were once applied at substantial rates on an extensive range of internationally traded products have been either reduced or eliminated, as a result of the work of the WORLD TRADE ORGANIZATION and the formation of various free trade blocs. (See TRADE INTEGRATION).

    Firms facing tariff obstacles to overseas markets may choose to absorb the duties payable by lowering profit margins, or they may be able to remain price-competitive by increasing productivity and reducing their supply costs. A further option open to MULTINATIONAL ENTERPRISES is for them to replace exporting by setting up manufacturing plants in the markets concerned. See PROTECTIONISM, DEINDUSTRIALIZATION, FOREIGN MARKET SERVICING STRATEGY, LOCAL CONTENT RULE.

  2. a charge for the consumption of a product or service, for example a meals tariff at a restaurant, or a tariff for gas and electricity supplies. Two-part tariffs are often used in connection with the supply of gas, electricity telephone services etc., involving a charge per unit of the good or service consumed, plus a fixed annual or quarterly charge to cover overhead costs. Two-part tariffs can be used by PUBLIC UTILITIES or firms to achieve the benefits of marginal cost pricing whilst raising sufficient revenues to cover total outlays (so avoiding a deficit). Additionally multi-part tariffs can be utilized to reflect the different marginal costs involved in offering products such as electricity, and rail and bus services at peak and off-peak periods.


Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
Tariffclick for a larger image
Fig. 180 Tariff.



import levy

a duty (a form of TAX) that is levied on IMPORTS. There are two main types of tariff:
  1. ad valorem duty, which is levied as a fixed percentage of the value of the good;
  2. specific duty, which is levied as a fixed sum of money per physical unit of the good. Tariffs are used to protect domestic industries from foreign competition and to raise revenue for the government.

The economic effects of a tariff are illustrated in Fig. 180. In the figure, DD and SS are the domestic demand and supply curves of good X. In a closed economy assuming perfect competition, the domestic price is OP1. Consider now an open-economy situation, with the world price for this particular good being OP2. Assuming that the country's demand for good X accounts for only a small fraction of total world demand for the good, such that it is unable to affect the terms of trade of the good, then, under conditions of FREE TRADE, the domestic price will also be OP2. At price OP2, domestic consumption is Ob, domestic production is Oa, and imports, being the difference between the two, are equal to ab.

The imposition of a specific tariff, T, will cause the domestic price of imports to rise by the full amount of the duty, to price OP3 in the figure. At price OP3, domestic consumption falls from Ob to Od, domestic production increases from Oa to Oc, and imports are reduced from ab to cd. The area YZLM (import volume cd times tariffper unit OP2 OP3) represents government revenue from the tariff.

Although producers of the protected good gain by now being able to increase their supply of the good (that is, from Oa to Oc), the overall effect of the tariff is to reduce the productive efficiency of the economy and consumer welfare. The triangle XYZ represents the ‘production loss’ to the economy. Under conditions of full resource employment, production in the tariff-protected industry can be increased only by diverting resources away from other (nonprotected) industries, which rank higher in the order of productive efficiency. Thus, some resources are allocated less efficiently as a result of the tariff. The triangle LMN represents the ‘consumption loss’ (loss of CONSUMERS’ SURPLUS) to society. As a result of the tariff, some buyers are forced to switch to less desirable substitute products while those consumers continuing to buy the good are now forced to pay a price for it that is in excess of the real economic costs of supplying it.

How effective the tariff is as a means of protecting the domestic industry will depend upon the PRICE-ELASTICITY OF DEMAND for the imported good. If import demand is highly price-inelastic, there will be little reduction in the volume of imports. In these cases, a more effective means of protection is a QUOTA that places a physical ceiling on the amount of imports permitted. See also PROTECTIONISM, NOMINAL RATE OF PROTECTION, EFFECTIVE RATE OF PROTECTION, WORLD TRADE ORGANIZATION, TRADE CREATION, TRADE DIVERSION.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
For tarriff purposes, RBOCs will insist that all new services are interexchange carriage and therefore logical candidates for contributing to the subsidy of local service.
With guidance from FDA, we plan to conduct a pilot study shortly followed by a pivotal trial to test our hypothesis,' stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.
"In the meantime, we have engaged in a formal process to evaluate, recruit and add Board members, and we plan to expand management to assist CEO Laurence Cooper, M.D., Ph.D., and the management team to maximize the value of our Controlled IL-12 and Sleeping Beauty platforms." Ziopharm Director Scott Tarriff, CEO of Eagle Pharmaceuticals, added, "Despite the recent request from the U.S.
Eagle president and CEO, Scott Tarriff, said, 'Arsia will significantly enhance Eagle's formulation capabilities and greatly expand our product development opportunities.
The stars are featured at a party, where an unknown actor outwits the celebrities at their own game - he outguns Gerard Butler and gets more laughs than Ahmed Helmy , but can he find a mobile tarriff in the UAE that Etisalat can't match or beat?
B Grade offences carry one-to-two-match banD s, with a two-to-three-match tarriff on Grade C ones, for which Hull captain Gareth Ellis and Hull KR forward Justin Poore have been cited.
Joe and his son Neville were the principle figures in the scheme to deal with the commercial threat from Germany, based on sealing Germany out of British empire markets by bringing in a tarriff system around those empire markets.
Hutchinson, now aged 73, is to challenge his so-called whole-life tarriff after a ruling by the European Court of Human Rights that such sentences breach - you might have guessed it - a prisoner's human rights.
Summary: Yorkshire Ripper, Peter Sutcliffe, has lost his bid to go to the highest court in the land, to challenge his "whole life" tarriff.
Newbold saw off The Mill 5- 0 with goals from Kane Potter, Greg Linton, Tarriff Bryan, Laurie Warren and Richard Bollen while Woodlands went one better against Quigleys as Rikki Harfield, John Brown, Mark Lovell, Sam Bourne and Luke Lovell (2) shared the spoils.
Rival E.ON yesterday launched a new fixed-rate fuel tarriff.