Question

Tariff is a

• A. A tax levied on imported goods
• B. A tax levied on domestic goods
• C. A barrier that a nation places on the physical amount of exports
• D. A barrier that a nation places on the physical amount of imports

Hint:

Trade Policy Terms:
TARIFF = TAX Duty on IMPORTED goods.
QUOTA = Physical QUANTITY limit on imports/exports.
EXCISE = Tax on domestically manufactured goods.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
International trade policy instruments: tariffs (customs duties) are specific or ad valorem taxes imposed on imported foreign commodities, whereas physical quantity restrictions are import quotas.
Key Formula or Approach:
\[ \text{Tariff} = \text{Customs Duty / Tax on Imports} \quad \longleftrightarrow \quad \text{Quota} = \text{Physical Quantitative Limit on Imports} \]

Step 2: Detailed Explanation:
In international trade theory, customs policy, and seafood commerce:
1. Tariff (Customs Duty) (A): A tax, duty, or financial surcharge levied by a national government directly upon imported goods and merchandise entering across international borders (either ad valorem [% of value] or specific [fixed charge per unit weight]). Tariffs increase the domestic price of foreign goods, protecting domestic industries and generating state revenue.
2. Quota (Import Quota): A non-tariff physical quantitative trade barrier placing a numerical limit on the volume of goods imported.
3. Excise Duty: A tax levied on domestic goods.

Step 3: Final Answer:
Therefore, a Tariff is A tax levied on imported goods, matching option (A).