purpose of education

3. TARIFFTARIFF
FACILATATO
R: Abdul Hakeem Pitafi

4. TARIFF
ØTariff: A tax (duty) levied on a product when it
crosses national boundaries
=>Import tariff
=>Export tariff (not common)
Ø Tariffs may be imposed for protection or revenue
=>Protective tariff (protect domestic industry from
competition)
=> Revenue tariff
> Decreasing tariff revenue trend for industrial nations
> Percentage of government revenue derived from
tariffs

5. ØEXPORT TARIFF :- Are the taxes that
are levied on goods when they leave
the country.
ØIMPORT TARIFF :- Are the taxes on
the goods which are imported.
ØTRANSIT TARIFF :- Are the taxes
which are imposed on the goods as
they pass through one country bound
for another.

6. Types of Tariffs
•• Specific tariffSpecific tariff
–– Fixed amount of money per physical unit of theFixed amount of money per physical unit of the
imported productimported product
•• Ad valorem (of value) tariffAd valorem (of value) tariff
–– Fixed percentage of the value of the importedFixed percentage of the value of the imported
productproduct
•• Compound tariffCompound tariff
–– Combination of specific and ad valorem tariffsCombination of specific and ad valorem tariffs

7. Ø Specific TariffsSpecific Tariffs
A fixed fee levied on one unit of an imported good is referredA fixed fee levied on one unit of an imported good is referred
to as a specific tariff. This tariff can vary according to theto as a specific tariff. This tariff can vary according to the
type of good imported. For example, a country could levy atype of good imported. For example, a country could levy a
$15 tariff on each pair of shoes imported, but levy a $300$15 tariff on each pair of shoes imported, but levy a $300
tariff on each computer imported.tariff on each computer imported.
ØAd Valorem TariffsAd Valorem Tariffs
““According to value," and this type of tariff is levied on aAccording to value," and this type of tariff is levied on a
good based on a percentage of that good's value. An examplegood based on a percentage of that good's value. An example
of an ad valorem tariff would be a 15% tariff levied by Japanof an ad valorem tariff would be a 15% tariff levied by Japan
on U.S. automobiles. The 15% is a price increase on the valueon U.S. automobiles. The 15% is a price increase on the value
of the automobile, so a $10,000 vehicle now costs $11,500 toof the automobile, so a $10,000 vehicle now costs $11,500 to
Japanese consumers.Japanese consumers.

8. Tariff BarriersØ
Ø Subsidy an amount of money paid by government to
a firm per unit of output to encourage output and
to give the firms an advantage over foreign
competitors
Ø Embargo refers to a complete ban on trade (import
or export) in one or more products with a
particular country. It may be placed on one or
more goods or completely ban trade in all goods.
It is the most restrictive non-tariff trade barrier.
(it can also be termed as absolute quota)
Ø Currency control refers to restrictions on the
convertibility of currency into other currencies.

9. •
• Import Quotas
An import quota is a restriction placed on the
amount of a particular good that can be imported.
This sort of barrier is often associated with the
issuance of licenses. For example, a country may
place a quota on the volume of imported citrus
fruit that is allowed
• Voluntary Export Restraints
A voluntary agreement b/w an importing and
exporting country that limits the volume of
trade in particular products
• Licenses
A license is granted to a business by the
government and allows the business to import a
certain type of good into the country.

10. PROTECTIONISM
Protectionism, policy of protecting
domestic industries against foreign
competition by means of tariffs,
subsidies, import quotas, or other
restrictions or handicaps placed on
the imports of foreign competitors

11. Effects of Tariff
ØProtective Effect :Protective Effect : A tariff has protective effect for theA tariff has protective effect for the
domestic industries. It tends to raise the domesticdomestic industries. It tends to raise the domestic
price of the imported commodity, reduce the domesticprice of the imported commodity, reduce the domestic
demand for that commodity and thereby stimulates itsdemand for that commodity and thereby stimulates its
domestic produc­tion.domestic produc­tion.
ØConsumption Effect :Consumption Effect : Imposition of tariff raises theImposition of tariff raises the
price, and as a result, the demand for the commodityprice, and as a result, the demand for the commodity
falls.falls.
ØRevenue Effect :Revenue Effect : The govt drives revenue from the tariffThe govt drives revenue from the tariff
which is measured by the quantity of the importswhich is measured by the quantity of the imports
multiply by the rate of the tariffmultiply by the rate of the tariff

12. Ø Terms of trade effect :Terms of trade effect : when a country imposes awhen a country imposes a
tariff duty, its willingness to receive imports istariff duty, its willingness to receive imports is
reduced. For a given quantity of exportsreduced. For a given quantity of exports
Ø Balance of payments effect :Balance of payments effect : tariff has favorabletariff has favorable
effect on the balance of payments position of theeffect on the balance of payments position of the
imposing country. It reduces imports and increasesimposing country. It reduces imports and increases
the export surplus of the country. Thus, throughthe export surplus of the country. Thus, through
tariffs, a deficit in the balance of payment can betariffs, a deficit in the balance of payment can be
corrected.corrected.
Ø Income effect :Income effect : as a result of tariff, the expenditureas a result of tariff, the expenditure
on imported goods is reduced. This will increaseon imported goods is reduced. This will increase
the export surplus of the country and thereby thethe export surplus of the country and thereby the
income from foreign trade.income from foreign trade.
Ø Competitive effect :Competitive effect : tariff protects the domestictariff protects the domestic

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14. THANK YOUTHANK YOU