A tariff is a tax imposed by a country on imported or exported goods. It is calculated as a percentage of a product’s price.

In other words, tariffs affect international trade policy by limiting imports of foreign goods or exports overseas.

Tariffs can vary according to trade agreements, like CUSMA for instance, that allow certain countries to benefit from these preferential conditions.

For example, if you export to a country that raises tariffs on imported goods, it may lead to an increase in your product costs as well as greater competition from local suppliers and a disruption in the supply chain. 

Although an import tariff can cause the importer (for instance, a company in the U.S.) to pay a premium on an item coming from another country (for instance, Canada), the importing company may reduce its margins and choose not to pass on the increased cost to its customers. This can help it keep its prices competitive in the market. 

For more information about the nature and potential impact of tariffs, check the Export Development Canada (EDC) website.