The Difference Between Tariff and Duty in Custom Clearance

Often people get confused between the customs duties and tariffs because of the complexity of the terminologies as well as the misunderstandings or fewer understandings of customs clearance systems. In fact, there are distinct differences between duties and tariffs in spite of the facts that they are different forms of taxes imposed by the government and normally collected at one place and by same persons or officials. However, new import and export start-ups, as well as business persons who have less exposure to legal maters, are not expected to differentiate between duties and tariffs. It is the professional and experienced customs brokers like Clearit USA customs consulting know the difference between duties and tariffs.

The custom duties are taxes which are imposed by the customs on the products or goods and services both imported from outside the country as well as goods and services which are manufactured or produced in the country. On the other hand, the tariffs are imposed exclusively on the goods or services which are imported from other countries. The purpose or the objective of custom tariffs is to protect and promote the interest of the domestic market and to ensure the safety and security of the citizens. 

As customs tariffs are imposed on imported goods, the price of imported goods eventually increases in the domestic market resulting in the importation of less quantity of those goods from the international market to the domestic market. On the other hand, since there will be less quantity of those goods in the domestic market, the supply of those goods by the domestic manufacturer as well as the market will ultimately increase.

There are two basic types of custom tariffs such as import tariffs and the export tariffs. The tariffs which are imposed on the goods meant for importing are called import tariffs and the tariffs which are imposed on the goods meant for exporting are called export tariffs. However, customs duties are also imposed on certain products or goods meant for exporting which are called export duties. 

The reason behind imposing tariffs both on import and export is to increase the revenue of the government as well as to give priority to the domestic market and business. The customs duties, as well as tariffs, are indirect taxes and the customs duties, in particular, is somewhat similar to the consumer tax. The duties which are imposed on the imported goods are generally called the custom duties whereas the duties which are imposed on the goods that are manufactured in the country are normally called excise duties.