1. Economic Policy
***Tariffs***

2. fee collected when goods or services cross the country’s borders
Definition
fee collected when goods or services cross the country’s borders
country’s geographical border may be different from its customs border
one of the oldest and most commonly used tools of trade policy.

3. Types of tariff import; export; transit; TARIFF TARIFF TARIFF COUNTRY

4. Types of tariff [cont.] ad valorem; ad spetiem (specific); compound;
as a percentage of the value of the goods
How to define this value?
ad spetiem (specific);
fixed amount for a certain quantity of the goods , e.g. 10 EUR per 1 tone
compound;
e.g. a percentage of the value but not less than a fixed amount for a certain quantity

5. Tariff classification
classification of goods and relevant tariffs
one-column
multiple-column
tariffs
g o od s
tariffs
g o od s
tariff preferences

6. Effects of tariffs
redistribution – change of a consumer surplus (CS); a producer surplus (PS); a government surplus (GS)
fiscal – income to the state budget
protection – domestic producers against foreign competitors
consumption – consumers have to pay more => buy less

7. Mechanism of tariffs Autarky = no foreign trade Free Trade CS CS PS PS
Demand
Price
Quantity
Supply
P(H) Q
Price
Quantity
Supply
P(H) Q
Demand CS CS PS
P(W) Q1 Q2 PS
Import

8. Mechanism of tariffs Free trade Protectionism CS PS CS PS GS Import
P(W) Q1 Q2 CS PS
Price
Quantity
Supply
P(H) Q
Demand
Protectionism
Cena
Quantity
Supply
P(H) Q
Demand CS
P(W) + T Q3 Q4 PS GS
P(W) Q1 Q2
Import