Trade Tariff

What Is a Trade Tariff?

A trade tariff is a tax imposed by a government on imported (or, less commonly, exported) goods, typically calculated as a percentage of the goods' declared value.

How Do Trade Tariffs Work?

Tariffs are assessed based on a product's HS code classification and country of origin, with rates varying significantly by product category and trading partner, and sometimes further affected by trade agreements (which can reduce or eliminate tariffs) or additional punitive tariffs (like anti-dumping duties or Section 301 tariffs).

Why Trade Tariffs Matter

Tariff rates directly affect landed cost and can shift the economics of sourcing decisions significantly, a product that's cost-competitive from one country can become uncompetitive if tariff rates change. Given how frequently tariff policy has shifted in recent years, companies with significant import exposure need to actively monitor tariff changes on their specific products and sourcing countries, rather than treating tariff rates as a fixed, one-time input to cost calculations.