What Is the Difference Between Taxes, Duties, and Tariffs?

Introducing individuals to terms in the shipping industry can be confusing in some cases due to how some of those words interact with one another. For instance, you might wonder about the difference between taxes, duties, and tariffs. All three of these terms have different definitions, but remain part of the same family, so to speak. You can learn what sets each term apart today by reading these swift, detailed summaries.

Taxes

Duties and tariffs are types of taxes, so let’s define what a tax is first. A tax is a charge imposed by the government and comes in two primary forms—direct and indirect. Although each form is similar, the rest of this guide will show you what sets both apart, like the definitions of duties and tariffs themselves. Next, we will discuss where duties fit into your international shipping fees.

Duties

Duties are indirect taxes that affect imported goods, as well as items produced domestically. Being an indirect tax from the government, the charge is part of the item’s base price.

In other words, the seller of the good is taxed, but the seller ensures the price of the item accommodates that tax, so the buyer is paying the extra cost indirectly. As specialists in expedited freight delivery and more shipping strategies, we want to help you understand the costs embedded in the shipping world so you can navigate them without any misunderstandings.

Tariffs

Now that you have more context for the terms above, discussing tariffs should be relatively straightforward. The tariff on international shipping refers to taxes applied to goods imported from another country to the U.S. Tariffs can also apply to exports. More specifically, this is a form of direct tax from the government.

As a result of this tax potentially raising shipping costs in certain situations, that higher charge often affects those goods when consumers buy them. Since this result is somewhat similar, though not identical, to how duties influence the market price, it’s understandable that tariffs and duties can confuse some people. Thankfully, this discussion of the difference between taxes, duties, and tariffs is here to help you learn the essentials and plan your shipments accordingly.