What does Tariff Stand for?

Tariff is the tax that must be paid to the State through customs for the goods that you want to import or export.

The tariff is a customs duty converted into law to regulate the entry and exit of goods through the borders of a country. The tariffs applied to importation and exportation are different for each product and each State.

The tariffs have two purposes:

  • Protective: protects the competitiveness of national goods,
  • Collection: it serves as a source of income for the State.

The word tariff comes from the Andalusian Arabic al-Inzál that refers to the tax charged to the military for lodging in the countryside.

Types of tariffs

Four basic types of tariffs can be found:

  • Ad valorem law: it is a percentage of the value of the merchandise, for example, 5% of the value.
  • Specific right: the weight or volume is considered, for example, 5 dollars per kilo.
  • Compound or mixed law: it is a mixture of the two previous tariffs and sets a minimum or maximum, for example, 5% for a minimum of 5 dollars per kilo.
  • Zero tariff: this applies in cases where there is an agreement to reduce or eliminate tariffs for the movement of goods between two or more countries, such as free trade agreements (FTA).