Multiple Column Tariff

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.

Understanding Multiple Column Tariffs

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 Union, 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.