Legal Definitions - import duty

An import duty is a tax imposed by a government on goods brought into its country from abroad. This tax is typically collected by customs authorities at the point of entry and is levied on the value or quantity of the imported items. Governments use import duties for various reasons, including generating revenue, protecting domestic industries from foreign competition, or influencing trade relationships.

Here are some examples to illustrate the concept of an import duty:

• A clothing retailer in Canada orders a large shipment of winter coats manufactured in Vietnam. When the coats arrive at a Canadian port, the Canada Border Services Agency assesses an import duty on the value of the goods before they can be released for sale in Canadian stores.

  Illustration: This demonstrates an import duty because the Canadian government is levying a tax on goods (winter coats) that are being brought into Canada from another country (Vietnam). The retailer must pay this duty to legally import and sell the products within Canada.

• An electronics company in Mexico manufactures televisions and sources specialized display screens from a supplier in South Korea. To bring these screens into Mexico for assembly into their televisions, the Mexican government imposes an import duty.

  Illustration: Here, the import duty is applied to manufacturing components (display screens) crossing international borders into Mexico. This tax adds to the cost of production for the Mexican electronics company, illustrating how duties can affect supply chains for businesses.

• A European Union member state, aiming to support its local agricultural sector, imposes a high import duty on certain types of fresh produce, such as oranges, coming from non-EU countries during peak harvest seasons. This makes imported oranges more expensive than locally grown ones.

  Illustration: This example highlights an import duty used as a protective measure. The duty makes foreign produce less competitive by increasing its price, directly supporting the country's own farmers and demonstrating a common economic rationale behind such taxes.