Duty vs Tariff

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21 Aug, 2024

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Table Of Contents

Difference Between Duty and Tariff

The key difference between Duty and Tariff lies in the way goods and products are manufactured and transported from one nation to another. Tariffs are direct taxes the government imposes on goods imported from another country. In contrast, duties are indirect taxes imposed on the consumer for imported goods, local goods, and intrastate transactions.

While duty is the tax that the government imposes on the goods and services manufactured and sold within a country and on the goods and services imported from another country, the tariff is the tax that the government imposes only on the goods or services imported between different countries to protect the business of domestic manufacturers and suppliers by reducing the level of competition.

Difference Between Duty and Tariff

Duty vs. Tariff - Comparative Table

Let’s now look at the head to head difference between Duty vs. Tariff.

Basis - Duty vs. Tariff	Duty	Tariff
Definition	Duty is a kind of indirect tax imposed by the government on the consumer and is imposed on goods that are imported and goods manufactured locally and are part of an intrastate transaction.	Tariffs are taxes that are imposed by the government on the goods imported from a different country.
Nature	Duties are similar to indirect taxes and are imposed on consumers. Duty is also popularly known as the consumer tax.	Tariffs are similar to direct taxes imposed on imported and exported goods.
Types	The kind of popular duty is exciting duties and customs duties.	Tariffs can import tariffs or export tariffs based on the tariff imposed on imported goods or exported goods.
Goods covered	Duties imposed on the import of goods are known as customs duty. Duty on goods manufactured domestically and part of an intrastate transaction is known as excise duty.	Tariffs are imposed on goods imported or exported by the manufactures of a country to an international country.
Secondary Uses	The other uses of duty include import duties, excise duties, succession or death duties, and stamp duties.	The other uses of tariff include a general list of prices.

What is Duty?

Duty is another tax the government imposes on goods imported into the domestic country. This duty is popularly known as import duty. Duty is also imposed on the goods manufactured within the country.

Though less frequent regarding the number of goods covered, duty is also imposed on some export goods. That type of duty is popularly known as the export duty.
Unlike tariffs, duties are indirect and considered as indirect taxes.
A duty is considered an indirect tax because it is somewhat similar to a consumer tax. The government imposes a duty on the consumer who will import that particular item from an international country to the domestic country.
The few types of popularly known duties are excise duties and customs duties. The import duty imposed on the goods imported from a foreign land is known as the customs duty. The kind of tax imposed on the goods manufactured and are part of the intrastate transaction is known as the excise duty.

What Is A Tariff?

Tariffs are taxes the government imposes on goods imported from a different country. If the government imposes tariffs on imported goods, the prices of that goodwill increase in the domestic market. As a result of imposing tariffs on goods, the quantity of that good imported from the international market will decrease, and the supply of that goodwill will increase in the domestic market.

Tariffs are of two types one is an import tariff, and the other one is an export tariff. The tariff imposed on imported goods is the import tariff. Similarly, the tariff imposed on the export goods is known as export tariffs. The government imposes import or export tariffs because it increases the government's revenue in terms of tariff collection.
The short result of imposing tariffs is foreign exporters, importers lose, domestic producers gain, and the government gains from the tariff revenue.

Duty vs. Tariff - Infographics

Listed below as an infographic, the top 5 differences between Duty and Tariff.

Similarities

Along with having multiple differences, there are certain things common between duty and tariff. Let us have a look at the similarities they share:

Both are types of taxes imposed on the goods imported and exported to and from one country to another.
The purpose of both are the same, i.e., to protect the native industries and firms, thereby making their respective economies or governments earn a significant income, and leading to the reduction of trade deficits.
There are instances where these terms can be used as a substitute for each other.