Chapter 4 Flashcards
tariff
A tax (duty) levied on a product when it crosses national boundaries.
import tariff
Most widespread tariff, levied on imports.
export tariff
less common, imposed on exports. Often used by developing nations?
protective tariff
Designed to reduce the amount of imports entering a country, thus insulating import-competing producers from foreign competition.
revenue tariff
Imposed for the purpose of generating tax revenues and may be placed on either exports or imports.
specific tariff
Expressed in terms of a fixed amount of money per physical unit of the imported product.
(eg. pays $100 per computer, no matter cost of computer)
ad valorem tariff
Expressed as a fixed percentage of the value of the imported product. (like sales tax)
compound tariff
A combination of specific and ad valorem tariffs.
customs valuation
Determine the value of an imported product
free-on-board (FOB) valuation
Used by US, tariff is applied to product’s value as it leaves the exporting country.
cost-insurance-freight (CIF) valuation
Used by Europeans, whereby ad valorem tariffs are levied as a percentage of the import commodity’s goal value as it arrives at its final destination.
nominal tariff rate
Published in the country’s tariff schedule. It applies to the value of a finished product that is imported into a country.
effective tariff rate
Takes into account nominal rate + any tariff rate applied to imported inputs that are used in producing the finished product.
tariff avoidance
The legal utilization of the tariff system to one’s own advantage in order to reduce the amount of tariff that is payable by means that are within the law.
tariff evasion
When the individuals/firms evade tariffs by illegal means, such as smuggling imported goods into a country.
