International Trade - Theory and Policy, 2010a

One thing to think about while reviewing this tariff schedule is the administrative cost of monitoring and
taxing imported goods. Not only does the customs service incur costs to properly categorize and measure
goods entering the country, but foreign firms themselves must be attuned to the intricacies of the tariff
schedule of all the countries to which they export. All of this requires the attention and time of employees
of the firms and represents a cost of doing business. These administrative costs are rarely included in the
evaluation of trade policies.
An administratively cheaper alternative would be to charge a fixed ad valorem tariff on all goods that
enter, much like a local sales tax. However, for political reasons, it would be almost impossible to switch
to this much simpler alternative.
EXERCISE
1. Jeopardy Questions. As in the popular television game show, you are given an answer to a
question and you must respond with the question. For example, if the answer is “a tax on
imports,” then the correct question is “What is a tariff?” [Note: the following exercises are
meant to provide practice in reading and interpreting the U.S. tariff schedule.]
1. The 2009 MFN tariff rate on imported broccoli that has been processed by cutting or
slicing before shipping.
2. The allowable diameter range for ceramic plates valued over $8.50 under HTS code
6912.00.45.
3. The 2009 U.S. tariff on truck imports from Singapore.
4. The 2009 MFN tariff on cauliflower that entered the U.S. in November.
5. The 2009 U.S. tariff on golf clubs from Israel.
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