Tariff

Tariff, list or schedule of customs duties generally imposed by a government on imports and, in some instances, on exports. Originally, such imposts were levied to raise revenue. After the growth of industry and the formation of national economies and nation-states in the 16th and 17th centuries, customs duties were imposed chiefly as instruments of national economic policy. Tariffs were imposed to protect domestic industries against foreign competition and to achieve a favourable balance of trade. These practices led to the levying of high and often discriminatory imposts by one government as an expression of hostility to another government; friendly governments were frequently accorded preferential tariff treatment. The peace treaties negotiated by the major warring powers of Europe during the 17th and 18th centuries often contained provisions for the reduction of import duties; after 1700, virtually every treaty regulating commerce contained a most-favoured-nation clause obligating the signatories to extend to each other tariff treatment as favourable as that extended to any other nation.

In the 19th century, tariffs continued the upward trend begun in the preceding centuries. An exception was the free trade policy of Great Britain. This trend in tariff rates continued in the 20th century and was intensified early in the Great Depression of the 1930s. During the depression, however, some countries made a concerted effort to reduce tariff barriers. After 1934 the United States negotiated reciprocal bilateral trade agreements that reduced some duties and provided for most-favoured-nation status.

After World War II the trend towards a worldwide reduction in tariff barriers continued with the establishment of the General Agreement on Tariffs and Trade (GATT) and the formation of regional customs unions, such as Benelux and the European Community (now called the European Union). These groups lowered tariffs among themselves and maintained a common tariff for non-members. World trade promotion through lower international tariffs and the removal of other impediments continues to be fostered by GATT signatories following the completion of the Uruguay Round of GATT and the establishment of the World Trade Organization (WTO) in 1995.