What is a Tariff?
In its simplest form, a tariff is government-imposed duties or taxes on goods crossing the border into their country. When trying to sell and ship products internationally, you’ll have to pay a certain amount of tariffs to get that product across the border and into that customer’s hands.
Why Do Governments Impose Tariffs?
There are several reasons why countries impose these fees on foreign imports. One of the key reasons is to protect domestic industries. By making imported products more expensive, consumers in that country will opt to buy products made within their country. Another reason is to collect raise government revenue from imports which can then be used for domestic affairs like building new infrastructure. Tariffs can also be used to impose political leverage on another country depending on who is in office at what time in each country.
How Much Do Tariffs Cost?
The cost of tariffs your e-commerce business will have to pay when sending packages to different countries will depend on the country and the type of item your specifically trying to ship. It may also depend on the political situation within that country you’re trying to ship to. The person in office at the time could raise tariffs on the country your shipping from to increase revenue or make a political statement.
Tariffs vs. Customs Duties vs. Taxes
While all of these costs are associated with shipping to a foreign country, each serves a different purpose and is imposed differently.
When it comes to tariffs, these are given to certain products coming from certain countries at a certain point in time. Customs duties, on the other hand, come from particular characteristics of your products. Tax rates, such as the goods and services tax (GST), are fixed and are based on the total value of the product you’re trying to ship into the country.