What is the Difference between Tariff and Non-Tariff Barrier? 

When you work in international trade, you need to familiarise yourself with several specific terms and conditions. One of the most common terms used in global trade activities is tariff, or in other words, often known as a trade barrier. What is it and why does it exist in the first place? This article will help you understand the various forms of tariffs, their differences with other non-tariff (trade) barriers and how the difference between tariff and non-tariff barriers can affect the prices of imported products. 

What is a tariff? 

Before elaborating on the difference between tariff and non-tariff barriers, we need to understand what a tariff is. A tariff is generally a type of international trade barrier made by the government to protect domestic products from similar imported goods. Tariffs are charged to the importers, yet they can do things to alleviate the burden, either ask the exporters to reduce the price, cut their margin or raise the fixed price in order to get consumers to pay the tariff. Importers can also combine those three measures. There are three common types of tariffs or import taxes. 

• Ad valorem tariff: tariffs or import taxes that are calculated by the value of the imported products, usually as a percentage of the price. 
• Specific tariff: an international trade barrier in the form of fixed charges or taxes, calculated by the amount of a unit or weight. 
• Compound tariff: a combination of two previous tariffs, which created a more complex international tax on imported goods. 

However, governments can also create and use other types of tariffs below. Although uncommon, they are often applied in particular situations

• Anti-dumping tariff: This tariff is often applied to imported products with a relatively lower price compared to similar domestic products.
• Retaliatory tariff: a trade barrier that is imposed in response to a tariff stipulated by the international trade partners.
• Preferential tariff: a special tariff discount or even removal imposed by one country to its particular trade partners, generally as a result of international trade agreements, etc. 

What is a non-tariff barrier? 

Regardless of the common use, tariffs have negative impacts on global trade activities. It tends to affect a nation’s competitiveness in international trade and definitely has an impact on its relationship with its global partners. This leads to the creation of a non-tariff barrier. It is still a trade barrier, but was executed in a different approach and generally will not have a direct influence on the price of imported goods. Non-tariff barriers are also the responsibility of importers, so there is no difference between tariff and non-tariff barriers in this case. 

To understand the difference between tariffs and non-tariff barriers, please pay attention to the most common types of trade barriers other than tariffs below.  

• Quota is a non-tariff international trade barrier that works by limiting the quantity of imported products allowed to enter the domestic market. 
• A license helps the local authority to filter the exporters, as well as delaying the flow of imported goods, in order to protect the domestic businesses. 
• Certification or standardization is made in order to maintain the safety and balance. It is usually related to health and environmental risks as well as to ensure the products’ quality and propriety before entering the domestic market. 
• Voluntary export restraint is an international trade barrier imposed “voluntarily” by exporting parties/countries and usually made as an agreement between two countries to protect their respective markets. 
• Local content requirement is a form of trade protection that is achieved by ensuring that certain elements of imported goods are made domestically. 

What is the difference between tariff and non-tariff barrier?

From the examples above, it is clear that there is a difference between tariff and non-tariff barriers in their forms and direct/indirect influences. While tariffs or import taxes are in the form of international tax and automatically affect the prices of imported products, non-tariff barriers have a more unique and diverse manifestation. They could be quotas, required documentation, or specific arrangements. Moreover, non-tariff barriers do not directly influence the prices, but potentially affect the supply chain. 

Despite the difference between tariff and non-tariff barriers, both are made with one vision, which is to protect the domestic market. They work by raising the price of imported products and limiting their availability. This ideally will shape the domestic consumers’ behaviour: prioritizing local products. 

They also exist to protect consumers, particularly for products with relatively higher health and safety risks, such as raw agricultural products (vegetables, fruits, meats), packaged meals, pharmaceutical products, and many more. Despite the difference between tariff and non-tariff barriers, they also help secure national interests and bargaining power, whether to protect emerging industries, ensure the domestic employment rate, or can also be utilized as a retaliation over trade disputes. 

Finding tariff barriers and non-barriers using the HS Code Match

After understanding the difference between tariff and non-tariff barriers, there are some challenges in finding those regulations. Somehow, finding the difference between tariff and non-tariff barriers is quite complicated because international parties must take a look at the official documents from the governments. 

In order to solve this problem, HS Code Match offers an easy and quick tool to find accurate HS codes as well as the difference between tariff and non-tariff barriers for your products. Here are the instructions to find the tariff barriers using HS Code Match. 

• First step: Open the HS Code Match application by clicking hscodematch.com on your browser. Then, choose the country of origin and the destination country, and the product name on the Find Best Tariff tool. For example, we can choose to export canola oil from Canada to China. 

• Second step: HS Code Match will provide the lists based on the best preference. Then, you can choose the closest products with the HS code that you are looking for. For example, we can choose the first HS code 1514990000. 

• Third step: After clicking the first recommendation, we can move to the Regulation Details page. From this page, we can see that the tariff rates or general import duty for exporting canola oil from Canada to China is 9% and if there is an FTA between the two countries. 

• Fourth step: To find the non-tariff barriers, we can move to the bottom part of the HS Code Details page. HS Code Match provided the official documents from the Chinese government to guide you in finding the tariff and non-tariff barriers. You can also use the AI Assistant in HS Code Match to help you find a specific part regarding the difference between tariff and non-tariff barriers. 

These are examples of answers from an AI chatbot about the difference between tariff and non-tariff barriers for exporting canola oil from China to the United States:

What are the tariff barriers for exporting canola oil from China to Canada?

The HS code 1514990000 is a code for exporting canola oil as an edible oil from Canada to China. From this answer, the international tariff barrier for exporting canola oil from Canada to China is included in a non-preferential tariff regime, which is applied to other countries as well. The general tariff for exporting canola oil is 9%, and it is stated under the Most-Favoured Nation (MFN). Canada and China do not have a Free Trade Agreement (FTA) to reduce or eliminate the international tariff rates or other taxes. The chatbot also gives an explanation table for the tariff barrier of exporting canola oil under HS code 1514990000. 

HS code	Product Description	Tariff type	Import duty rate	Applicable country
1514990000	Canola oil	Non-preferential regime (MFN)	9%	China

What are the non-tariff barriers for exporting canola oil from China to Canada?

China imposed a 9% standard import duty on canola oil from Canada under the MFN regime. These international tariffs are applied to non-members of the FTA because China and Canada do not have an FTA to reduce or eliminate the tariff rates or import taxes. However, there are no sources related to the non-tariff barrier that applies to the products under the HS code 1514990000. There is a possibility that China is conducting sanitary or phytosanitary inspections on canola oil products or other agricultural products from Canada. From the available document, there is no indication that there is a differential treatment or additional checking process or quarantine procedure for importing canola oil from Canada. Here is the table of parameters to explain the non-tariff barrier for exporting canola oil from Canada to China. 

Parameter	Value or description
HS Code	1514990000
Import Duty Rate	9% under MFN
Preferential Tariff Rate	Not applicable because there is no FTA between Canada and China
Sanitary or Phytosanitary (SPS) Inspections	No reference from the sources that there a SPS barriers for exporting canola oil from Canada to China
Import Conditions	Standard conditions apply, and there are no special SPS or other technical non-tariff barriers
Country of Origin (Canada)	Canola oil is not clearly excluded or is a subject of special treatment

How does China’s duty on canola oil from Canada compare to other vegetable oil imports? 

The importation of canola oil from Canada is subject to a 9% import tax, and it is under the Most Favoured Nation (MFN). If we compare with the vegetable oil from other nations, there is a significantly lower tariff than the canola oil from Canada. For instance, exporting vegetable oil from ASEAN countries is only imposed a 5% duty under the ASEAN-China FTA. The importation of vegetable oil from India, Korea, Sri Lanka, and Bangladesh, also subject to a 5% import tariff. Meanwhile, products from Hong Kong and Macao are not subject to duty, which means there is no tariff for exporting products from those two regions to China. Similarly, Taiwan is also benefiting from a 0% international trade tax to China under the Economic Cooperation Framework Agreement (ECFA). Lastly, the countries that are considered as Least Developed Countries (LDCs) enjoy 0% tariff rates to export their product to China. On the other hand, China has imposed higher tariff rates on the United States at 25% since September 2018 due to the trade war between the two countries. Here is the detailed comparison table to explain the duty rates for exporting a product under HS code 1514990000. 

Country/Region	Duty rate	Trade Agreement	HS code 1514990000 relevance
United States	25%	Retaliatory tariff	Non-preferential and high rates due to the trade war
ASEAN countries	5%	ASEAN-China FTA	Preferential rate under regional agreement
India	5%	India-China FTA	Preferential treatment
South Korea	5%	China-Korea FTA	Preferential rate
Australia	0%	Australia-China FTA	Zero import tax under the bilateral agreement
New Zealand	0%	NZ-China FTA	Zero import tax
Switzerland	0%	Switzerland-China FTA	Zero import tax
Hong Kong	0%	CEPA	Zero import tax
Macao	0%	CEPA	Zero import tax
Taiwan	0%	ECFA	Zero import tax
LDC’s	0%	LDC’s Preferential Tariff	Zero import tax
MFN including Canada	9%	Non-preferential regime	Standard duty for all countries that have no FTA with China

Conclusion 

The difference between tariff and non-tariff barriers is quite visible. The tariff barrier is a form of international tariff or tax that is imposed on some products from other countries. On the other hand, a non-tariff barrier is a complicated regulation to be fulfilled in order to export some products. These two restrictions must be understandable to the international trade actors before exporting products. The understanding of the difference between tariff and non-tariff barriers will be necessary to avoid inaccurate estimation of the price of products, and also the limitation of quotas or other restrictions. 

Frequently Asked Questions (FAQ) about the difference between tariff and non-tariff barriers

1. What is the general tariff for exporting canola oil from Canada to China?

For exporting canola oil from Canada to China, there is a 9% tariff rate. This rate is based on Most Favoured Nations (MFN), which means there is no special treatment and is the same as other similar products from other countries. Through the HS Code Match application, you can understand the difference between tariff and non-tariff barriers. 

2. What are the non-tariff barriers for exporting canola oil from Canada to China?

From the results of HS Code Match, the document does not mention that there are no non-trade barriers for exporting canola oil from Canada to China. However, there is a possibility that China requires or conducts inspection on canola oil ot other vegetable oil from Canada or other countries. 

3. Are there any FTAs between China and Canada to reduce tariffs and non-tariff barriers?

No, China and Canada do not have any Free Trade Agreements (FTAs). Therefore, the importation of products, including canola oil from Canada to China, is mostly imposed by standard tariff rates based on the MFN regime.

4. What is the main difference between tariff and non-tariff barrier?   

The main difference between tariff and non-tariff barriers is the form and influence. While tariffs often came in the form of taxes (direct added-value), non-tariff barriers came in the form of designated restrictions, such as quotas (maximum amount) or required documentation. The tariff affects consumers directly by influencing the price/cost, in contrast to non-tariff barriers, which merely have indirect impacts, such as delay or rarity of supply. 

5. Which type of trade barrier affects consumers most? 

Both types of barriers affect consumers, but the international tax or tariff has more impact on us by directly raising the cost or price. However, non-tariff barriers could also potentially delay the availability of your desired imported products. 

6. Who benefits from the tariff and trade barrier? 

The government benefits from the tariff and trade barrier in general by gaining international tax revenue. However, international trade barriers also help the local business thrive in the domestic market, benefiting from the restricted access of competitors. 

7. Can international sanctions be considered as trade barriers? 

Yes, sanctions can function as non-tariff trade barriers, particularly in order to protect national security or impose a change of nature. EU and US economic sanctions on Russia are an example of this. Those countries impose trade barriers to create pressure on Russia as a response to its invasion of Ukraine.