Canadian Border Security (CBSA) Practice Exam

What is a tariff?

1. A fee applied to local businesses

2. A tax on individuals

3. A list of commodities with corresponding customs duty rates

4. A penalty for illegally imported goods

The correct answer is: A list of commodities with corresponding customs duty rates

A tariff is essentially a tax imposed on imported goods and services, which is reflected as a list of commodities accompanied by their corresponding customs duty rates. Governments use tariffs as a tool to control trade and to protect domestic industries by making imported goods more expensive relative to local products. This system allows for the regulation of the volume of imports entering a country, as well as influencing consumer behavior toward domestic goods. The other options do not accurately describe what a tariff is. A fee applied to local businesses relates more closely to operational costs or business taxes rather than international trade. A tax on individuals pertains to personal income tax or other individual taxation systems, which are distinct from tariffs that apply to goods. Lastly, a penalty for illegally imported goods refers to legal consequences and does not encompass the overarching concept of tariffs, which deal with the lawful importation of items and their associated duties.