Sep 14, 2018

Wordology, Tarriff

Basically, a tariff is a tax levied by governments to control the flow of products across borders and making foreign manufacturers’ products more expensive. The purpose is to increase demand for domestic products while reducing the volume of imports. Tariff charges can be fixed price or a percentage of the transaction price.

In the United States tariffs, also called duties or levies are collected by Customs and Border Protection agents at 328 ports of entry across the country.

Importers pay more for products by paying the tax on top of the product cost. They pass along the increased costs to businesses, which pass along the higher costs to shoppers.

Because a tariff is a tax, the government receives increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.