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Tariffs

12 important questions on Tariffs

The reasons why tariffs are imposed are because of:

· Protection purposes
· Increasing revenues.

The complexities of determining the ad valorem tariff percentage are:

· Disagreements regarding product values
· Fluctuation of import prices.
· Variations in the methods used to determine a commodity’s value.

FOB: free-on-board valuation:

The tariff is applied to a product’s value as it leaves the exporting country. Mostly used by the United States of America.

CIF: cost-insurance-freight valuation:

Ad valorem tariffs are levied as a percentage of the imported commodity’s total value as it arrives as its final destination. Mostly used by Europe.

The nominal rate tariff:

Is the rate that is published in the country’s tariff schedule and applies to the value of a finished product that is imported into a country.

FTZ: foreign – trade zone:

An area within he US where business can operate without the responsibility of paying customer duties on imported products or materials for as long as they remain within this area and do not enter the U.S. marketplace.

The difference between a bonded warehouse and foreign-trade zone is:

Importers who FTZ’s can conduct a broader range of business activities than occur in bonded warehouses that permit only the storage of imported goods and limited repackaging and processing activities.

The difference between the amount that buyers would be willing and able to pay for a good and the actual amount they do pay.

The revenue producers receive over and above the minimum amount required to induce them to supply a good. This minimum amount has to cover the producer’s total variable costs.

Beggar – thy - neighbour policy:

When imposing an optimal tariff whereby the importing nation accrues a benefit through a lower import price, means a loss for the foreign exporting nation.
A beggar – thy – neighbour policy could invite retaliation.

The protection – biased sector:

Consists of import – competing producers, labor unions representing workers in that in that industry, and suppliers to the producers in the industry.

The free trade – biased sector:

Comprises exporting companies, their workers, and their suppliers. It also consists of consumers, including wholesalers and retail merchants of imported goods.

A supply and demand view of protectionism:

Protectionism is supplied by the domestic government, while domestic companies and workers are the source of the demand.

The question on the page originate from the summary of the following study material:

International Economics and Businesses.

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Tariffs

12 important questions on Tariffs

The reasons why tariffs are imposed are because of:

The complexities of determining the ad valorem tariff percentage are:

FOB: free-on-board valuation:

CIF: cost-insurance-freight valuation:

The nominal rate tariff:

FTZ: foreign – trade zone:

The difference between a bonded warehouse and foreign-trade zone is:

The difference between the amount that buyers would be willing and able to pay for a good and the actual amount they do pay.

Beggar – thy - neighbour policy:

The protection – biased sector:

The free trade – biased sector:

A supply and demand view of protectionism:

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