import tariff
As the world begins its globalization, many countries enliven the globalization by conducting trade activities with other countries in form of exports and imports. In order to make the trade activities more regulated, each country must have its own trade policy such as tariff barriers and non-tariff barriers. Tariff is a tax imposed on imports or exports, a fee that a government charges to the importers of foreign goods and it is passed along the customers through higher prices on imported goods. Tariffs are more common to be imposed for commodity imports, based on the value of the good or on a fixed price unit and it is usually imposed by a national government when the imports cross its customs boundary (The Politics of International Economic Relations). Most countries impose tariff on import activities inside their countries to fulfill several objectives such as decreasing the amount of imports inside the countries by making the price more expensive (JawaPos, "Perda Mobil Asing Bekas; antara Kebutuhan dan Aturan Main Mobil"), decreasing the outflow of foreign reserves and protecting domestic industries (JawaPos, "Dikaji, Harmonisasi Tarif BM Industri Agro).
Moreover, because the impact of tariff policy depends on the cost structure of domestic firms, uninformed policymakers will not be able to predict the qualitative effects of tariff policy (Journal, "Tariff Policy and Entry with Cost-Based Informational Asymmetries"). Tariff regulation can create speculation activities (Kompas, "Pengaturan Impor Beras Munculkan Spekulasi"), moreover; imposing tariffs will encourage smuggling and corruption. Meanwhile in the exporting country, producers, consumers and the government will get the effect of tariff imposed by the importing country. Prohibitive tariff is a tariff that will be increased up until a point that there is no longer any international trade, since the price is excessively high until there is no longer any excess demand in importing country. In order to accelerate the import activities for steel materials, the government imposes a zero percent import tariff. Tariff barrier is crucial for Indonesia as a developing country in which a large part of the population earned their living from cultivating food crops (The Jakarta Post, "RI to Defend Agricultural Tariff Policy at WTO"). The producers will have fewer sales at the same price as before, and might even lower the price in domestic market in order to lessen the excess supply. In order to survive, these "hulu" steel industries begin to take a glimpse on export markets which is more profitable for them (JawaPos, "Stok Baja KS Melimpah"). Agricultural sectors, especially rice, are the industries that are mostly stroked because of import activities. The tariff also brings some disadvantages, especially for "hulu" steel industries. For this reason, it is better for the country not to contemplate on how much tariff should be imposed for imported products to protect domestic industries and economy, but to consider that the economic betterment can be obtained by promoting exports. Tariff on rice in Indonesia can help the country to be independent and self-sufficiency in rice since increase in price will generate incentives to increase domestic rice productivity in the long term. tariffs such as prohibitive tariff, protective tariff, and revenue-producing tariff.
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