The Concept of Differential Tariffs

Understand differential tariffs in international trade.Explore types like preferential & aggravated tariffs,and their impact.Learn about trade wars and GATT.

The General and Narrow Sense of Differential Tariffs

Differential tariff differentiation.

Broadly speaking,differential tariffs are generally divided into the following three categories.

① Depending on the different exporting countries of the imported goods,differential tariffs are levied,including retaliatory tariffs and preferential tariffs.

② Depending on the price differences of the imported goods,differential tariffs,countervailing duties,anti - dumping duties,etc.are applied.

③ Depending on the differences in the import methods of the imported goods,such as the differences between goods imported by domestic ships and those imported by ships of other countries,or corresponding differential tax rates are adopted in the importing country to levy tariffs.

However,from a narrow perspective,the so - called differential tariffs only refer to a country levying tariffs and surcharges on certain goods from another country,and the tax rates used will be higher than the general tariffs to be observed.

Categories of Differential Tariffs

Types of differential tariffs

Preferential Tariffs.

These tariffs are lower than the general tariff rates and are usually used in trade between the exporting and importing countries if they have signed a friendly agreement.

For example,most - favored - nation tariffs and international bilateral tariffs,and they are usually formally stipulated in the tariff law,announced and implemented.

Aggravated Tariffs.

These tariffs are higher than the general tariff rates and can also be called discriminatory tariffs.They originate from protectionism and were particularly common during the mercantilist period.

Levying higher tariffs can easily lead to a trade war or tariff war between two countries,which will also have an adverse impact on the economic and trade development of the relevant countries.

For these reasons,the General Agreement on Tariffs and Trade advocates trade liberalization and opposes discriminatory differential tariffs.However,if the export dumping and export subsidy behaviors of a country cause certain losses to this country,anti - dumping and countervailing duties can be levied on the relevant goods.However,both anti - dumping duties and countervailing duties fall within the scope of aggravated tariffs and are not levied according to the general legal tax rate,but are levied according to the degree of dumping and the amount of subsidy.

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