{"id":4632,"date":"2019-06-18T13:37:49","date_gmt":"2019-06-18T18:37:49","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/business-taxes\/tariff-laws-and-the-tariff-exemption-process.html"},"modified":"2024-05-23T02:04:26","modified_gmt":"2024-05-23T07:04:26","slug":"tariff-laws-and-the-tariff-exemption-process","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/business-taxes\/tariff-laws-and-the-tariff-exemption-process.html","title":{"rendered":"Tariff Laws and the Tariff Exemption Process"},"content":{"rendered":"\n
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Tariff Laws and the Tariff Exemption Process<\/h1>\n
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If you run a business, tariffs can dramatically impact your bottom line. Let’s say you’re a furniture maker renowned for your black maple coffee tables, and the government slaps a 25-percent tariff on Canadian black maple, the finest variety. Will you have to raise prices? Will you change the type of wood you use?<\/p>\r\n

Read on to learn more about tariff laws, how they work, and how you might be able to request an exemption for your business.<\/p>\r\n

The Purpose of Tariffs<\/h2>\r\n

Essentially, a tariff<\/a> is a tax imposed on a category of imported goods. Customs officials collect the payment when the items pass through a port of entry<\/a>. Other terms for tariff are "customs duty" and "import duty."<\/p>\r\n

Although tariffs generate revenue for a government’s treasury, that’s not usually the primary reason why they’re used. Rather, the typical purpose of a tariff is to shield domestic industries from foreign competition by raising the price of imported products.<\/p>\r\n

In developed economies like the U.S., tariffs may help manufacturing industries compete against overseas firms that pay their workers a fraction as much and don’t have to comply with stringent environmental and other laws. In developing economies such as Nigeria<\/a> and Brazil<\/a>, tariffs are often used to protect local or infant industries so they can develop to the point where they can compete internationally.<\/p>\r\n

The Downsides of Tariffs<\/h2>\r\n

The main drawback of tariff laws is that other nations may decide to retaliate by increasing their own customs duties. This, in turn, makes it harder to export products to those markets. When tariff disputes arise between nations, the World Trade Organization<\/a> provides an international forum to resolve them.<\/p>\r\n

Who loses most from high tariffs? Arguably it’s consumers, who may see price spikes because importers pass on the cost of customs duties to other parties down the line. Furthermore, tariffs can put upward pressure on prices by reducing competition that helps keep them down.<\/p>\r\n

How Tariffs Are Imposed<\/h2>\r\n

Tariff levels are often set by international agreements, and some nations have negotiated so-called free trade agreements<\/a> that reduce tariff rates on commerce between them.<\/p>\r\n

In the U.S., the Constitution assigns the role of laying tariffs solely to the legislative branch. However, Congress has delegated certain powers to the President to deal with situations where quick or decisive action is necessary, such as war or threats to national security. These delegating statutes include:<\/p>\r\n