Application of Tariffs

Tariffs are taxes or duties imposed by governments on imported or exported goods, and they serve multiple purposes, including generating revenue for governments, protecting domestic industries, and regulating trade. When discussing the application of tariffs, it refers to the actual implementation and enforcement of these taxes on goods crossing international borders. 

Tariffs can be classified into various types, such as ad valorem tariffs (based on a percentage of the product’s value) and specific tariffs (levied as a fixed amount per unit of a product). The application of tariffs involves the following key steps: 

• Tariff Classification: Goods must be classified under the appropriate tariff code, which determines the applicable tariff rate. International organizations like the World Customs Organization (WCO) provide standardized tariff nomenclatures. 
• Customs Valuation: To determine the tariff amount for ad valorem tariffs, customs authorities assess the product’s value based on various factors, including the transaction price, adjustments for transportation, insurance, and other costs. 
• Tariff Rates: Each country has its tariff schedule, which lists the specific rates for different goods. The application of tariffs necessitates referencing these schedules to calculate the amount owed. 
• Documentation and Declaration: Importers and exporters are required to provide accurate documentation, including invoices, certificates of origin, and customs declarations, to facilitate tariff assessment and clearance. 

Customs authorities are responsible for examining goods, verifying documentation, and collecting the appropriate tariff payments before allowing goods to enter or exit a country.