How Tariffs Work and Their Ripple Effects on the Economy

4. How Governments Impose and Enforce Tariffs

Governments decide which goods will be taxed and set the rates. Customs officials calculate the tariff based on the shipment’s value, type, or quantity. For instance, a $50,000 shipment with a 10% tariff incurs $5,000 in taxes.

Tariff schedules—lists of rates for different goods—guide this process.

Trade agreements may reduce or eliminate tariffs, while trade disputes often result in higher rates. In most cases, tariffs raise costs for businesses and consumers alike.