What is a 'Multiple Column Tariff'?

A multiple column tariff is a system where the tariff rate or import tax assessed on a particular product depends on its country of origin. This is diametrically opposite to a single tariff system, which levies the same tariff rate on a product regardless of its point of origin.

BREAKING DOWN 'Multiple Column Tariff'

Tariffs can take the form of either a single column tariff, a multiple column tariff, or a traditional or conventional tariff.

Types of Tariffs

A single column tariff has a uniform rate levied on all imported commodities and is also known as a uni-linear tariff system. 

A common external tariff is uniformly applied by a common market or customs union. The European Common Market, for example, has a free internal trade area with a common external tariff that is applied to products that are imported from non-member countries.

A multi column tariff has two or more duties imposed on each commodity. For example, in India, the government has applied double-column tariffs to commodities since the commonwealth preference agreement of 1932. Under the agreement, goods from commonwealth countries are charged lower tariffs.

For traditional or conventional tariffs, a basic duty is imposed on each class of commodity with the understanding that the rate can be reduced under reciprocal international trade agreements.

Most nations employ multiple column tariffs, with the lowest tariff rates applied to goods that originate from countries with whom a nation has free trade agreements. Or, multiple column tariffs are applied to a nation that is considered undeveloped and the highest tariff rates are assessed on products from developed countries with which it has no trade agreements and/or diplomatic relations.

The Effect of Tariffs

When tariffs are imposed on an imported goods, they affect the domestic price of the good. Tariffs also affect the domestic production of goods that compete with the imported good, and they affect the production of the good in foreign countries. Tariffs also change the structure of the domestic economy.

An oft-cited criticism of the multiple column tariff system is that it is in nature and an impediment to free trade. However, advocates of this system maintain that it is necessary to improve the competitiveness of exports from lesser developed and developing nations and aid their economic development.

The United States uses a two-column tariff schedule because the United States have lower tariffs for countries to which they grant most-favored-nation treatment. Some British Commonwealth countries, such as India, maintain a double-column tariff that provides preferential tariff treatment to other members of the Commonwealth.

  1. Tariff

    A tariff is a tax imposed on imported goods and services.
  2. China ETF

    A China ETF is an exchange-traded fund that invests in and tracks ...
  3. Section 232 of the Trade Expansion ...

    Section 232 of the Trade Expansion Act of 1962, authorizes the ...
  4. Tax Exporting

    Tax exporting is the practice of one jurisdiction or country ...
  5. Customs Barrier

    A customs barrier is any measure designed to limit international ...
  6. Import Duty

    Import duty is tax collected on imports and some exports by a ...
Related Articles
  1. Insights

    How Would a Trade War Affect You

    On Friday, July 6th, at exactly 12:01 am, the U.S. fired the first shots of war. They weren’t missiles, or drones, or marines, but instead, billions of dollars worth of tariffs aimed at the Chinese ...
  2. Investing

    Gundlach Pessimistic About a Trade War

    The billionaire bond investor says he was taught from an early age that tariffs caused the Great Depression.
  3. Investing

    US Futures Dip After New $100B Trump Tariff Threat

    Wall Street had been hoping that a compromise was forthcoming.
  4. Investing

    Vanguard's Davis: Tariffs Will Be a Non-Event

    Vanguard isn't concerned about the new tariffs, saying that the policy will have little impact on the economy.
  5. Investing

    Charles Schwab Counsels Wait-and-See Approach on Trump Tariff Proposal

    A wait-and-see approach to President Trump's tariff proposal on steel may be the best approach, says Charles Schwab.
  6. Investing

    U.S. Stocks Could Be Hurt By Chinese Soy Tariffs

    Believe it or not, the U.S. exports soy. And China is its biggest customer.
  7. Personal Finance

    Rising Mortgage Rates, Tariffs Could Hurt Housing Market

    Rising mortgage rates and President Trump's tariffs could hurt the spring real estate selling season.
  8. Investing

    S&P 500 Could Fall 5% if 25% Tariffs on China Levied: UBS

    The brokerage firm expects a 10% levy to be imposed later this month and warned that the market has not priced in 25% tariffs.
  9. Insights

    Trump's Steel and Aluminum Tariffs: What You Need to Know

    A look at key issues regarding the latest import tariffs on steel and aluminium announced by President Trump
  10. Investing

    Manitowoc Could Be Biggest Tariffs Loser: JPM

    When it comes to proposed steel and aluminium tariffs, Manitowoc could end up the biggest loser.
  1. How does Federal Trade Commission use the Herfindahl-Hirschman Index to evaluate ...

    Understand specific examples of domestic products that rely on protective tariffs to survive. Learn about the varying tariff ... Read Answer >>
  2. What are some examples of free market economies?

    In a free market economy, the law of supply and demand, rather than a central government, regulates production and labor. ... Read Answer >>
  3. How do you calculate marginal tax rates in Excel?

    Learn how to approximate marginal taxes owed and how to use marginal tax rate formulas in Excel to provide an accurate number ... Read Answer >>
  4. The risks businesses face in international finance

    When an organization engages in international financing activities, it takes on additional risk, including foreign exchange ... Read Answer >>
  5. What indicators are used in exchange rate forecasting?

    Learn what economic indicators are most widely used to forecast a country’s exchange rate and how various foreign exchange ... Read Answer >>
Trading Center