Research: Tariff primer: Five ways to tax

Print Article

Tuesday’s first of a two-part primer on tariffs outlined their basic function, uses, and history. Today’s concludes with five common types of tariffs.

•••

If you missed this column on Tuesday, a tariff is essentially a tax on trade, placed by the receiving country, on imported goods. The exporter, typically a company or manufacturer, pays the tax.

Tariffs have been around for centuries. Headlines aside, whether they’re good or bad depends on one’s perspective. While consumers enjoy access to more and cheaper products and sellers enjoy bigger markets for their goods, certain key domestic industries (with associated jobs) struggle to compete globally — in a world whose survival increasingly demands it — when playing fields are not level.

For such a simple idea, tariffs are complicated and emotionally charged. They’re also levied differently, both in terms of purpose and calculation.

Prohibitive and protective tariffs. These two are both common and controversial. A prohibitive tariff is one set so high that it’s meant to keep the good from being imported at all; it is sometimes used as a punitive measure. A protective tariff is less extreme, used to increase the price of imported goods to ease competition. Both serve to protect domestic industries. Both tend to elicit retaliatory tariffs.

Ad valorem. Ad valorem tariffs are based solely on the goods’ net worth, set as a percentage. A hypothetical example would be a 10 percent tariff levied on the importation of bananas from Honduras. If one banana is priced at $1, then the tariff would be 10 cents.

Specific tariffs. Specific tariffs are based on the quantity of the goods, rather than estimated value. Quantity can refer to a specific number of goods (e.g., 100 bananas), volume (e.g., per gallon), or a weight (e.g., per pound). A compound tariff combines the ad valorem and specific tariff. For example, fashion items such as shoes may be assessed with a compound tariff of $1/pair plus 25 percent.

Revenue tariffs. As the name implies, the goal of a revenue tariff is simply to increase the government’s revenue by taxing a specific product. Revenue tariffs are commonly placed on oil.

Note that these categories aren’t necessarily mutually exclusive; a protective tariff, for example, may be assessed on a specific or ad valorem basis.

Nor are tariffs a black and white issue. Consult 10 sources on trade policies and you’ll likely get 20 conclusions. Perhaps most answers lie in the gray areas.

•••

Sholeh Patrick, J.D. is a columnist for the Hagadone News Network and former managing editor of an international trade law journal.

Print Article

Read More Sholeh Patrick

Research: MLP: Now you too can write good

January 17, 2019 at 5:00 am | Coeur d'Alene Press Editor’s note: While Mrs. Language Person recovers from a broken wrist — no, not from wagging her finger too forcefully — we revisit some of her more memorable linquistic lectures. ••• What joy to ...

Comments

Read More

Research: MLP: Misused and abused

January 15, 2019 at 5:00 am | Coeur d'Alene Press Editor’s note: Mrs. Language Person has dusted off some of her favorite columns while filling in for Sholeh Patrick, who’s recovering from an injured wing. ••• Some readers have shared their lingui...

Comments

Read More

Research: MLP: Idioms are misspelled, by and large

January 10, 2019 at 5:00 am | Coeur d'Alene Press Bad grammar and misspelling spread faster than gossip in a hair salon. Your Mrs. Language Person can’t fathom why English speakers are so apt to misuse and abuse our colorful language, rather than to...

Comments

Read More

Research: MLP: Reflexive pronoun, spare thyself

January 08, 2019 at 5:00 am | Coeur d'Alene Press Editor’s note: While Sholeh is recovering from a broken wrist, we revisit some of her favorite Mrs. Language Person columns. Please, oh please Dear Reader, practice pretention prevention. You know...

Comments

Read More

Contact Us

(208) 664-8176
215 N. Second St
Coeur d'Alene, Idaho 83814

©2019 The Coeur d'Alene Press Terms of Use Privacy Policy
X
X