1. Chapter 8 Analysis of a Tariff

2. 8.1 Introduction Chapter Objective
To understand the effects of import tariffs on the imposing country and the world.

3. Contents Purposes for imposing a tariff Types of Tariffs
Ways to measure tariff levels
Effects of a tariff on a small country
Effects of a tariff on a large country

4. 8.2 The Evolvement of Tariffs
What is a tariff ?
The origin of tariffs: Tarifs
The Evolvement of Tariffs

5. 8.3 Why would a Country Impose a Tariff? Discourage consumption
Generate revenue
Reduce deficit in the balance
of payment
Protect domestic industries

6. 8.4 Types of Tariffs
Specific Tariffs
从量税
Ad Valorem Tariffs
从价税

7. Import Tariffs MFN rates Export Tariffs Transit Duties 过境税
Ordinary rates
Export Tariffs
Transit Duties
过境税

8. Import Surtaxes General Import Surtaxes Specific Import Surtaxes
Anti-dumping Duties
反倾销税
Countervailing Duties
反补贴税

9. Variable Levy 差价税 Common Agricultural Policy 共同农业政策
Target Price Threshold Price
Variable Levy = Threshold Price - CIF Price

10. Preferential duties
Lomé Convention 1975
洛美协定
ASEAN 东盟

11. Generalized System of Preferences 普遍优惠制
History
UNCTAD 联合国贸发会议
Geneva
New Delhi
The Group of 77

12. Preferences and Coverage
Recipient Countries
Products Covered
Magnitude of Preference

13. GSP and China

14. 8.5 Customs Tariff and Commodity Classification
海关税则
Tariff No.
Description of Goods
Rate of Duty

15. Commodity Classification
Customs Cooperation Council Nomenclature
（CCCN）
海关合作理事会税则商品目录
Standard International Trade Classification
国际贸易标准分类 （SITIC）
Harmonized Commodity Description and Coding
System （ HS ）
商品列名与编码协调制度

16. 第76章 铝及其制品 7601 未锻轧铝 7601.1000 非合金铝 7601.2000 铝合金 7602 废铝碎料
第76章 铝及其制品
未锻轧铝
非合金铝
铝合金
废铝碎料
废铝碎料
铝粉及片状粉末
非片状粉末
片状粉末

17. 8.6 Ways to Measure Tariff Level
simple average
简单平均
weighted average
加权平均

18. 8.7 What Happens When a
Small Country Imposes
an Import Tariff?

19. Consumer Surplus 消费者剩余PY
Consumer Surplus P0
Expenditure D
O Y Y

20. Producer Surplus 生产者剩余PY
Producer Surplus S P0
Costs
O Y Y

21. PY Sd H E P0 V G
P1+t
SW+t a b c d P1 SW Z F Dd
O Y Y4 Y0 Y Y Y

22. Loss in Consumer Surplus: a + b + c + d
a : Redistribution Effect
c : Revenue Effect
b : Production Effect
A deadweight loss from inefficient
domestic production
d : Consumption Effect
A deadweight loss from higher price
and lower consumption volume
b+d : Total deadweight losses

23. 8.8 What Happens When a
Large Country Imposes
an Import Tariff?

24. PY Sd
Sd+W+t b t
Sd+W d P1 a c P0 P2 e Dd
O Y1 Y Y2 Y Y

25. a , b, c, d
The same as in the small country
case.
e : terms-of-trade effect
Tariff revenue from the exporting
country

26. Net Welfare effect
If e>b+d, domestic welfare
If e<b+d, domestic welfare
In any case, world welfare

27. Nationally Optimal Tariff
t*=1/Sm
Sm: Price elasticity of foreign
export supply curve

28. Nationally Optimal Tariff
Beggar-thy-neighbor policy
Tariff war

29. 8.9 The Effective Rate of Protection
Under free trade
Domestic Value-added (V)
V0 = Pf – Pi
f : imported finished product
i : imported inputs

30. V0 = Pf – Pi
Under tariff protection
V1 = Pf (1+tf) – Pi (1+ti)
If V1 > V0 , Protection is effective.
ERP = =
a= Pi / Pf
V1 - V0
tf – ati V0
1- a

31. ERP and Tariff Structure
Suppose Country A imports X,
Pf =20, Pi =15, a=3/4,.
If tf=10% ,ti=0%; ERP=40%.
If tf=10% ,ti=10%; ERP=10%.
If tf=10% ,ti=20%; ERP=-20%.

32. ERP and Tariff Structure
If tf > ti , ERP> tf .
If tf = ti , ERP= tf = ti .
If tf < ti , ERP< tf .

33. Summary Effects of import tariffs Small country Large country
Effective rate of protection