What is a tariff, and who really pays it?
A tax a country charges on goods coming in, paid by the importer at the border.
The cost can end up in shop prices, in the seller's margin or in lost sales.
The rule
- The World Trade Organization says customs duties on merchandise imports are called tariffs. They give a price advantage to locally produced goods over similar imported ones, and they raise revenue for governments.
- The Australian Border Force says goods imported into Australia are generally liable for duties and taxes unless an exemption or concession applies.
- GST on imports is 10% of the customs value of the goods plus any duty, plus the cost of transport and insurance to Australia. So the duty is taxed again.
- Under the GST Act the importer pays GST at the same time and in the same manner as customs duty.
- No law sets how the cost of a tariff is shared after the border between the overseas seller, the shop and the shopper. The model above lets you set the split.
What people ask
Who pays a tariff?
The importer pays the duty at the border. After that, the cost can be taken by the overseas seller cutting its price, by the shop taking a smaller margin, or by the shopper paying more. How it splits depends on the product and the market.
Does a tariff make things more expensive?
It adds a cost at the border. Whether the shelf price rises depends on how much of that cost the seller and the shop absorb. Move the sliders above to see the shelf price change.
Why is GST charged on the tariff as well?
Because GST on an import is worked out on the customs value plus any duty plus freight and insurance. A $1,000 import with a 5% tariff has $50 of duty and $105 of GST.
What is the tariff on Australian goods going to the US?
This page does not give one. US rates have changed several times and the official pages needed to confirm today's rate were not available to check. Look up the current rate with the Department of Foreign Affairs and Trade.