Legal Definitions - duty on import

A duty on import refers to a tax or fee imposed by a government on goods that are brought into its country from another country. This tax, often called an import duty or customs duty, is typically collected at the border or port of entry. Governments levy these duties for various reasons, including generating revenue, regulating trade, and protecting domestic industries from foreign competition by making imported goods more expensive.

Here are some examples to illustrate this concept:

• Example 1: Consumer Electronics

  A consumer in Canada orders a new, high-end smartphone directly from a manufacturer based in South Korea. When the smartphone arrives at Canadian customs, the Canadian government assesses a specific percentage of the phone's value as a duty on import. This additional cost must be paid before the phone can be released and delivered to the consumer.

  Explanation: This illustrates a duty on import because the Canadian government is levying a tax (duty) on a product (smartphone) that is being brought into Canada (imported) from South Korea, adding to its final cost for the buyer.

• Example 2: Raw Materials for Manufacturing

  A textile company in Mexico regularly imports large quantities of specialized cotton fibers from a supplier in Egypt to use in its manufacturing process. Each shipment of cotton arriving in Mexico is subject to a duty on import imposed by the Mexican government. This duty increases the overall cost of the raw materials for the textile company.

  Explanation: In this scenario, the Mexican government is applying a tax (duty) on raw materials (cotton fibers) that are being brought into Mexico (imported) from Egypt, demonstrating how such duties can impact industrial supply chains.

• Example 3: Luxury Goods

  To discourage excessive consumption of non-essential items and generate revenue, a country might impose a particularly high duty on import on luxury vehicles, such as sports cars, brought in from overseas. If a dealership imports a high-performance car from Europe, they would have to pay a substantial duty based on the car's value before it can be sold domestically.

  Explanation: This example shows a government applying a significant tax (duty) on a high-value product (luxury vehicle) that is being brought into the country (imported), illustrating how duties can be used to influence markets for specific types of goods and generate substantial revenue.