Tariffs if a very popular word when referring to free trade agreements. In the majority of free trade agreements, the two or more countries agree to reduce and get rid of tariffs that can be imposed upon the goods that are imported and exported from the countries. The general term tariffs is usually used but there are actually several different types of tariffs that can be imposed on the different goods.
There are five different types of tariffs that can be put into effect by the customs office and government. The different types of tariffs include:
Ad valorem tariff. This a tariff that comes in the form of a set percentage of the goods being imported. The customers officer will add up the retail value of the goods and impliment a percentage of the value as the tariff that must be paid.
Protective tariff. These types of tariffs are placed by the government on goods that are imported in an effort to protect the countries specific trade on that good. This tariff raises the price of an imported good so high that others will turn to the local countries good instead.
Specific tariff. This is when the tariff that is asked is based off a set amount. The amount does not increase or decrease with the amount of goods that are being imported. The only way to change this type of tariff is by changing it yearly.
Retalitory tariff. This is done to get back at another country for charging a tariff on another countries goods.
Revenue tariff. These tariffs are set into place to solely make money for the government that is collecting the tariff. These are often set when a specific country cannot possible make a certain product and must rely upon the importing of that good.
Tariffs raise money for governments. free trade essentially takes away that potential money and many people oppose that.