## Defining Tariff
When goods and services are traded between two nations, it is called international trading. These goods and services are subject to a number of taxes as they cross the national boundaries. These taxes are collectively referred to as tariffs.
What is Tariff?
Tariff which is often referred to as customs duty is the tax levied on goods and services involved in international trading, after they cross the national boundaries. These taxes are usually imposed by the government of the importing country.
There are many reasons for the imposition of tariffs on goods and services, the primary reasons being reduction of importation of goods and protection of domestic producers. Another reason for imposing tariffs is to yield revenues. These tariffs can be interchangeable and have multiple benefits, for example, a tariff which is imposed for protection can yield revenues while a tariff imposed for yielding revenues may have a protective influence.
Different tariffs are imposed keeping different reasons in mind. The main three categories in which these tariffs can be divided are transit duties, export duties and import duties.
Categories of Tariffs
There are three main categories in which tariffs are classified—transit duties, export duties and import duties.
Transit Duties
Transit duties are applied on goods and services which are exported by one country, pass through another country and are imported by a third country. Transit duties are levied by the country through which the goods and services pass. These duties played an important role in the earlier times—from the 16th to the 19th century. However, these duties have no significant role in the modern times.
Export Duties
The main objective of export duties is to protect domestic products and these duties are mainly imposed on certain products like minerals, petrol and agricultural products.
Import duties
Import duties are the most important category of tariffs. These duties can be imposed for raising revenues or for protection by the country that imports the goods and services.
