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Tariffs are taxes on imported or exported goods. Governments must obtain approval from regulatory bodies, such as the US Congress or European Commission, and assign rates to a classification category. The Harmonized Tariff Schedule (HTS) in the US and Tax and Customs Union in Europe classify goods for customs tariffs. China’s Ministry of Transportation oversees tariff implementation. The World Trade Organization monitors rates and allows countries to restrict imports if they harm the economy. WTO members must engage in fair trade practices.
Tariffs are applied by a country to levy a tax on imported or exported goods. Typically, to implement a new tariff, a government must obtain approval of the tariff through its regulatory body, such as the US Congress or the European Commission’s Customs Union. The process varies by country, but typically after a new rate is approved, it is entered into the country’s trade regulation database and assigned to a classification category. From there, the rates are determined. For most of the world, tariffs are tracked and monitored by the World Trade Organization (WTO).
A Harmonized Tariff Schedule (HTS) was created in the United States to implement and regulate new tariffs. The HTS is a standardized list of names and numbers that classify commercial products imported into or exported to the United States. When a new tariff is passed by the US Congress, it is registered in the HTS. Each customs tariff is assigned a code which classifies the goods it includes. HTS is often changed as the US negotiates new free trade agreements with various countries. Although the HTS is held by the World Customs Organization and is recognized worldwide, other countries use their own unique systems for implementing tariffs.
The duty to apply a new tariff in Europe rests with the Tax and Customs Union of the European Commission. The Common Customs Tariff applies to goods imported beyond the borders of the European Union (EU). Acting similar to the United States Harmonized Tariff, the Tax and Customs Union classifies goods for the purpose of determining customs tariffs. All European regulations related to new tariffs are entered into TARIC, which is the name of the EU’s online customs tariff database. TARIC is updated daily for the benefit of EU member countries that use the data to determine customs clearance.
China’s implementation of a new tariff is largely overseen by its Ministry of Transportation, which is responsible for transportation through China’s airspace, roads and waters. The Ministry of Transport issues the rules governing the rules of filing the tariffs of non-operating common carriers (NVOCC). According to the NVOCC tariff filing rules, NVOCCs need to submit their freight tariffs to the Shanghai Shipping Exchange. Those who fail to comply with the formalities within a certain period of time could be subject to fines or prosecution.
Rates are monitored by the World Trade Organization. This provides guarantees so that a country can restrict imports for a period of time if the imported goods cause harm to the country’s economy. Under these circumstances, it is acceptable for the exporting country to raise or impose a new tariff on the country that limits its imports. All WTO Members are expected to engage in fair and equitable trade practices with regards to the enforcement of tariffs.
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