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What are tariffs, import duty and quotas?

Tariffs are a tax that countries can impose on goods imported from different parts of the world – essentially adding an extra cost to foreign products which, in turn, can make them more expensive for exporters, importers, the end consumer, or a combination of them all. 

What are tariffs, import duty and quotas?
What are tariffs, import duty and quotas?

Payoneer Team

What is a tariff?

Tariffs are a tax that countries can impose on goods imported from different parts of the world – essentially adding an extra cost to foreign products which, in turn, can make them more expensive for exporters, importers, the end consumer, or a combination of them all. 

The point of imposing these tariffs can be to protect local industries and encourage people to buy locally produced items rather than imported ones. Governments also use tariffs as a way to raise revenues or regulate the flow of specific goods.  

What is import duty?

Customs duties are a type of tariff where a tax is imposed by a country on goods that are imported from overseas.

What is a quota?

A quota is where a government will impose a limit on the quantity or value of certain imported goods – often relating to a specific country for a specific period of time.  

It’s used to control the amount of certain products (for example, cars or steel) that can be imported – again, potentially as a way of limiting overseas competition and protecting a domestic industry. 

We’ll be following the global trade news closely, so look out for more articles explaining some of the key terms in the story. 

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