tariff

1. A tax levied on a good imported into a country. In most instances, tariffs are intended to make imported goods more expensive than and thus less competitive with domestic products. Also called duty. See also ad valorem tariff, countervailing duties, General Agreement on Tariffs and Trade, specific tariff, trigger price.
2. The rates or charges for a firm's service or product. For example, a parking garage posts a schedule of its tariffs at the entrance. A common carrier has a schedule of tariffs for various types of goods it will transport.

Case Study A tariff imposed by a country can serve both as a source of revenue and as a barrier that protects a targeted group of businesses and their employees, but often at the expense of nearly everyone else. For example, a tariff on imported vehicles helps the domestic automobile industry and its suppliers, but penalizes car buyers, who are forced to pay higher prices and may have fewer choices. In some instances a country and the affected industries may decide a tariff no longer serves the purpose for which it was imposed. Such was the case with tariffs on aluminum imported into the European Union. In May 2007 the EU announced a trade agreement between the Gulf Cooperation Council and the European Union that would reduce by half the tariff on aluminum imported by the EU. The EU agreed to assess the situation in two years, with the possibility of eliminating the remaining tariff. Aluminum making requires large amounts of energy, the expense of which had increased dramatically. As a result, the production of aluminum was moving from the United States and Europe to energy-rich regions such as the Middle East. The EU wanted to reduce the cost of imported aluminum and other raw materials that could be fabricated in Europe into finished goods.