China Reciprocal Tariffs on the US

Tariffs Latest News

China imposes 34% reciprocal tariffs on imports of US goods in retaliation for Trump’s trade war

About Tariffs 

A tariff is a tax imposed by a government on imported goods or services to raise revenue, protect domestic industries, or influence trade balances.

Types of Tariffs

• Specific Tariff: A fixed amount charged on a particular quantity of an import (e.g., $5 per ton of steel).
• Ad Valorem Tariff: A percentage of the value of the import (e.g., 10% of the value of a car).

Purpose of Tariffs

• Revenue Generation: Governments can generate revenue by imposing tariffs on imported goods.
• Protectionism: Tariffs protect domestic industries by making foreign products more expensive, thus encouraging consumers to buy domestic goods.
• Retaliation: Tariffs are often used as retaliatory measures in trade disputes between countries.
• Strategic Influence: Used to influence trade negotiations, compel trading partners to comply with certain conditions.

Other Tariffs

• Non-Tariff Barriers (NTBs): Beyond tariffs, countries may impose other barriers to trade such as quotas, licensing requirements, and anti-dumping measures.
• Sanctions: Tariffs can be part of broader sanctions regimes aimed at pressuring countries for political or security reasons (e.g., sanctions on Iran or North Korea).

Role of WTO (World Trade Organization)

• Regulation of Tariffs: The WTO regulates the imposition of tariffs under the General Agreement on Tariffs and Trade (GATT). WTO members are committed to maintaining a tariff ceiling or bound rates.
• Dispute Resolution: The WTO provides a mechanism for resolving trade disputes, which includes reviewing whether tariffs are applied in compliance with international agreements.

Reciprocal Tarrifs FAQs

Q1. What is a reciprocal tariff? 

Ans. A reciprocal tariff is a trade policy where countries impose tariffs on each other’s goods to counteract trade barriers, aiming for fair trade.

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Q2. What are the four types of tariffs? 

Ans. The four main types of tariffs are: Specific Tariffs, Ad Valorem Tariffs, Compound Tariffs, Most Favored Nation (MFN) Tariffs. 

Q3. What is MFN in tariffs? 

Ans. Most Favored Nation (MFN) status ensures that a country applies the same tariff rates to all WTO member nations, promoting non-discriminatory trade practices.

Source: CNN