Tariffs and Taxes at the Border

Man filling out a form on a clipboardWhat are tariffs? 

Tariffs are a tax or duty that is applied to imports or exports of merchandise. Import duties, or tariffs, are paid by the importer, or buyer, and export tariffs are paid by the exporter, or seller. Most duties apply to importers or buyers, however exporters and sellers should also be aware of these additional costs as these can affect buyer demand. Applied tariffs are listed in national tariff schedules, which are organized by HS codes (see the guide on how do I determine my product’s HS code). 

A national tariff schedule may contain a range of duties for the same product depending on whether the importer is from a country with a preferential duty (see the guide on regional trade agreements and preferential trade agreements). If no trade agreement exists and there are no other duty specifications in the national tariff schedule, tariffs are applied at a most-favoured-nation (MFN) level. This means that all trading partners are treated equally for “like” products. Like products are those that are identical to the product under consideration and are direct competitors or substitutes. 

Other duties and charges for services rendered (ODCs) may also apply at the border. For more information on tariffs and the principles of the trading system, visit the World Trade Organization (WTO) website.

What are antidumping, countervailing, and safeguard duties? 

These duties can be applied to imports of specific products from certain countries and/or companies to protect domestic industries from allegedly unfair practices or surges in imports. Although antidumping and countervailing measures always take the form of a duty, safeguard measures may also be implemented in the form of quantitative restrictions. These are a type of non-tariff measure, which are explained in more detail in the guide on non-tariff measures. For more information on these types of import duties, see this WTO briefing note

What other taxes might I face at the border? 

Other taxes, including sales tax, value added tax (VAT), and goods and services tax (GST), are also levied at borders. These taxes, which are also applied inside the border, are levied on the importer. They generally are a set additional charge on the price. It is important to understand the type and amount of taxes applied in an economy before you export.

  • Sales tax is applied only at the final sale of a finished good or service.
  • VAT or GST is applied at each point in the production or distribution cycle, starting with raw materials and finishing with the final retail purchase. Although every purchaser pays VAT, businesses can deduct the amount of VAT paid to other firms. This leaves the burden on the final consumer, just as with sales tax.

How can I start identifying the tariff measures that apply to my product? 

Chambers of commerce, industry associations, and trade agencies may provide online portals with lists of trade measures that apply for your products. Businesses can also identify trade measures in their targeted markets by using these available online tools:

  • Global Trade Helpdesk: Provides an overview of tariffs, domestic and product requirements, and market conditions. Visit the Global Trade Helpdesk.
  • The Integrated Trade Intelligence Portal (I-TIP) provides a single-entry point for information compiled by the WTO on trade policy measures. It can be accessed here and includes Tariff Analysis Online.
  • Tariff Analysis Online: This is an advanced online database that allows users to extract detailed information for specific products, including bound and applied MFN and preferential tariffs at the national tariff line level (HS-8 digits or more), as well as other duties and charges as notified by importing economy.  It can be accessed here.
  • Market Access Map: This identifies customs tariffs, tariff-rate quotas, trade remedies, and non-tariff measures that apply to a specific good in any market in the world. Visit the map to learn more.
  • World Integrated Trade Solution (WITS): The WITS database displays detailed statistics and country profiles on trade flows, tariffs, and non-tariff measures. Visit the WITS database for further detail.

Where can I learn more? 

  • FedEx: This website has a useful video and other information on how duties and taxes are calculated, which can be accessed here.
  • VAT/GST by Country: More than 140 countries worldwide levy a VAT. Each country has its own VAT, so it is important to research and consider it as part of the cost for shipping abroad. Learn more at the U.S. Council for International Business
  • WTO DATA: This is a new data portal which publishes general statistical indicators related to WTO issues. This includes data on applied MFN, preferential, and bound tariffs for all WTO Members. These are aggregated at the standard HS levels (2-digit chapter, 4-digit heading and 6-digit subheading levels). The data portal can be accessed here.
  • World Tariff Profiles: This is a tariff data book jointly published by the WTO, the International Trade Centre (ITC), and UNCTAD, which provides comprehensive summary information on the tariffs and non-tariff measures imposed by over 170 countries and customs territories. Tariff data are presented in comparative tables and in one-page profiles for each economy. This data book can be accessed here.