How to Compare Tariff Rates by Country: A Guide for Importers and Exporters

Tariff rates are the taxes that countries impose on imported goods, capital and services. They are a form of trade protectionism that can affect the competitiveness and profitability of international trade. Tariff rates vary widely by country, product and trade agreement, so it is important for importers and exporters to be aware of the tariff rates that apply to their products in different markets.

In this article, we will explain how to compare tariff rates by country using various sources of data and information. We will also provide some tips on how to reduce or avoid tariff costs when trading internationally.

What are tariff rates and how are they calculated?

Tariff rates are the percentage of the value of the imported good that is charged as a tax by the importing country. For example, if a country has a 10% tariff rate on shoes, it means that for every $100 worth of shoes imported, $10 will be paid as a tariff to the customs authority.

Tariff rates can be applied in different ways, depending on the type and classification of the product. The most common types of tariff rates are:

Ad valorem tariffs

These are tariffs that are based on a percentage of the value of the imported good. For example, a 10% ad valorem tariff on shoes means that 10% of the value of each pair of shoes will be charged as a tariff.

Specific tariffs

These are tariffs that are based on a fixed amount per unit or quantity of the imported good. For example, a $5 specific tariff on shoes means that $5 will be charged as a tariff for each pair of shoes imported.

Compound tariffs

These are tariffs that combine both ad valorem and specific tariffs. For example, a 10% ad valorem tariff plus a $5 specific tariff on shoes means that both 10% of the value and $5 per pair will be charged as a tariff.

Tariff rates can also vary depending on the origin and destination of the product, as well as the trade agreements that exist between countries. For example, some countries may offer preferential or lower tariff rates to their trading partners or to developing countries, while others may impose higher or punitive tariff rates to protect their domestic industries or to retaliate against unfair trade practices.

How to compare tariff rates by country?

There are several sources of data and information that can help importers and exporters compare tariff rates by country. Some of the most useful ones are:

The World Bank’s World Integrated Trade Solution (WITS)

This is an online database that provides access to various sources of trade data, including tariff data from UNCTAD TRAINS, WTO IDB/CTS, World Bank MAcMap and ITC Market Access Map. Users can search for tariff data by country, product (at the HS 6-digit level) and trade agreement. Users can also download data in Excel format or visualize data in charts and maps.

The World Trade Organization’s (WTO) Tariff Analysis Online

This is an online tool that allows users to access and compare tariff data from WTO members and other countries. Users can search for tariff data by country, product (at the HS 6-digit level) and trade agreement. Users can also download data in Excel format or visualize data in charts and maps.

The International Trade Centre’s (ITC) Market Access Map

This is an online tool that provides information on market access conditions for over 200 countries and territories. Users can search for tariff data by country, product (at the HS 6-digit level) and trade agreement. Users can also download data in Excel format or visualize data in charts and maps.

The United Nations Conference on Trade and Development’s (UNCTAD) Trade Analysis Information System (TRAINS)

This is an online database that provides information on trade policy measures, including tariffs, non-tariff measures, trade remedies and trade facilitation. Users can search for tariff data by country, product (at the HS 6-digit level) and trade agreement. Users can also download data in Excel format or visualize data in charts and maps.

The U.S. International Trade Commission’s (USITC) DataWeb

This is an online database that provides access to U.S. trade data, including tariffs, imports, exports and trade balances. Users can search for tariff data by country, product (at the HS 10-digit level) and trade agreement. Users can also download data in Excel format or visualize data in charts and maps.

Using these sources, importers and exporters can compare tariff rates by country for their products of interest. For example, using WITS, we can compare the weighted average applied tariff rates for all products for some selected countries in 2018:

Country	Tariff rate (%)
Palau	34.63
Solomon Islands	30.28
Bermuda	27.59
Saint Kitts and Nevis	21.06
Gambia	18.08
Bahamas	17.05
Djibouti	17.56
Gabon	16.93
Cayman Islands	16.72
Central African Republic	16.44

Source: WITS, World Bank

We can see that Palau has the highest tariff rate among these countries, followed by Solomon Islands and Bermuda. These countries may have high tariff rates to protect their domestic industries, to raise government revenue, or to compensate for their small market size and lack of economies of scale.

On the other hand, using WITS, we can also compare the weighted average applied tariff rates for all products for some major trading partners in 2018:

Country	Tariff rate (%)
China	3.39
Japan	2.45
European Union	1.69
United States	1.59

Source: WITS, World Bank

We can see that these countries have relatively low tariff rates, reflecting their openness to trade and their participation in various trade agreements.

How to reduce or avoid tariff costs when trading internationally?

Tariff costs can have a significant impact on the profitability and competitiveness of international trade. Therefore, importers and exporters should look for ways to reduce or avoid tariff costs when trading internationally. Some of the possible ways are:

Seek preferential or lower tariff rates under trade agreements

Many countries have signed bilateral or regional trade agreements that offer preferential or lower tariff rates for certain products and origins. Importers and exporters should check if their products qualify for these preferential rates and comply with the rules of origin and other requirements to benefit from them.

Seek tariff exemptions or reductions under special regimes or programs

Some countries offer tariff exemptions or reductions for certain products or sectors under special regimes or programs, such as duty-free zones, bonded warehouses, temporary admission, inward processing, outward processing, drawback, etc. Importers and exporters should check if their products qualify for these regimes or programs and comply with the conditions and procedures to benefit from them.

Seek tariff refunds or rebates under special schemes or mechanisms

Some countries offer tariff refunds or rebates for certain products or situations under special schemes or mechanisms, such as export promotion schemes, export processing zones, value-added tax (VAT) refunds, etc. Importers and exporters should check if their products qualify for these schemes or mechanisms and comply with the documentation and verification requirements to benefit from them.

Seek tariff classification or valuation adjustments under customs rules or procedures

Some countries allow tariff classification or valuation adjustments for certain products or circumstances under customs rules or procedures, such as tariff engineering, first sale rule, transaction value method, etc. Importers and exporters should check if their products qualify for these adjustments and comply with the evidence and declaration requirements to benefit from them.

Seek alternative sources of supply or markets with lower tariff rates

Importers and exporters should also consider alternative sources of supply or markets with lower tariff rates for their products, as long as they meet their quality, quantity and delivery standards and expectations.

Tariff rates are an important factor that affects the competitiveness and profitability of international trade. Importers and exporters should be aware of the tariff rates that apply to their products in different markets and compare them using various sources of data and information. They should also look for ways to reduce or avoid tariff costs when trading internationally by seeking preferential or lower tariff rates under trade agreements, seeking tariff exemptions or reductions under special regimes or programs, seeking tariff refunds or rebates under special schemes or mechanisms, seeking tariff classification or valuation adjustments under customs rules or procedures, or seeking alternative sources of supply or markets with lower tariff rates.

How Tariff Rates Affect Global Demand in the Industry

Tariff rates are taxes levied on imported goods, capital and services. They are a form of protectionism that aims to reduce foreign competition and support domestic producers. However, tariff rates also affect global demand in the industry, as they influence the prices, quantities and quality of goods and services traded across borders.

In this blog post, we will examine how tariff rates by country vary and how they impact global demand in the industry using data from the World Bank and other sources.

The Variation of Tariff Rates by Country

According to the World Bank, the weighted mean applied tariff rate is the average of effectively applied rates weighted by the product import shares corresponding to each partner country. The data are classified using the Harmonized System of trade at the six- or eight-digit level and cover all products.

The following table shows the top 10 countries with the highest and lowest tariff rates in 2020, based on the World Bank data.

Rank	Country	Tariff rate, applied, weighted mean, all products (%)
1	Bermuda	24.07
2	Belize	18.69
3	Gambia	17.82
4	Fiji	16.62
5	Nauru	14.39
6	Venezuela	14.06
7	Sierra Leone	14.05
8	Solomon Islands	13.62
9	Antigua and Barbuda	13.07
10	Vanuatu	12.66
…	…	…
161	Singapore	0.00
162	Hong Kong SAR, China	0.00
163	Macao SAR, China	0.00

As we can see, there is a wide variation of tariff rates by country, ranging from zero to over 20 percent. Some of the factors that influence the level of tariff rates include:

The size and structure of the economy: Smaller and less diversified economies tend to have higher tariff rates to protect their domestic industries from foreign competition.
The trade policy orientation: Countries that pursue more open and liberal trade policies tend to have lower tariff rates to facilitate trade and integration with other markets.
The trade agreements: Countries that participate in free trade agreements (FTAs) or preferential trade arrangements (PTAs) tend to have lower or zero tariff rates for their trading partners, while maintaining higher tariffs for non-members.
The development status: Developing countries tend to have higher tariff rates to support their industrialization and economic development goals, while developed countries tend to have lower tariff rates to promote efficiency and innovation.

The Impact of Tariff Rates on Global Demand in the Industry

Tariff rates affect global demand in the industry by changing the relative prices and quantities of imported and domestic goods and services. The effects of tariff rates can be analyzed using the concepts of consumer surplus, producer surplus and deadweight loss.

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. Producer surplus is the difference between what producers receive for a good or service and what it costs them to produce it. Deadweight loss is the loss of economic efficiency that occurs when a market is not in equilibrium.

The following diagram illustrates how a tariff affects these concepts in a simple case of a small importing country.

In this diagram, D is the domestic demand curve, S is the domestic supply curve, Pw is the world price without tariff, Pt is the world price with tariff, Qd is the domestic quantity demanded, Qs is the domestic quantity supplied, Qw is the quantity imported without tariff, Qt is the quantity imported with tariff.

Without a tariff, the equilibrium price is Pw and the equilibrium quantity is Qd. The consumer surplus is the area A+B+C+D and the producer surplus is the area E. The total surplus is A+B+C+D+E.

With a tariff, the equilibrium price rises to Pt and the equilibrium quantity falls to Qt. The consumer surplus shrinks to area A and the producer surplus expands to area E+F. The government collects a tariff revenue equal to area C+G. The total surplus becomes A+E+F+C+G.

However, there is also a deadweight loss equal to area B+D, which represents the loss of economic efficiency due to the tariff. This deadweight loss occurs because some consumers who value the good more than Pw but less than Pt stop buying it, while some producers who can produce it at a cost less than Pw but more than Pt stop selling it. The tariff creates a wedge between the price paid by consumers and the price received by producers, which distorts the market signals and allocates resources inefficiently.

The impact of tariff rates on global demand in the industry depends on the elasticity of demand and supply, which measure how responsive consumers and producers are to changes in price. The more elastic the demand and supply, the larger the deadweight loss and the smaller the tariff revenue. The less elastic the demand and supply, the smaller the deadweight loss and the larger the tariff revenue.

In general, tariff rates reduce global demand in the industry by raising the price and lowering the quantity of imported goods and services. This reduces consumer surplus and creates a deadweight loss, while increasing producer surplus and generating tariff revenue. The net effect on social welfare depends on the relative magnitudes of these effects, which vary depending on the elasticity of demand and supply and the level of tariff rates.

References:

https://core.ac.uk/download/pdf/6958854.pdf

https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS
https://www.macmap.org/
https://unctad.org/en/Pages/DITC/Trade-Analysis/Non-Tariff-Measures/NTMs-TRAINS.aspx

https://wits.worldbank.org/

https://tao.wto.org/

https://www.macmap.org/

https://trains.unctad.org/

https://dataweb.usitc.gov/