Definition of Optimum Tariff

by Jennifer VanBaren - Updated September 26, 2017
Photography of a scene in the stock exchange, High Angle View, Chicago, United States of America

An optimum -- or optimal -- tariff is a tax designed for maximizing the welfare of a country. Optimum tariffs are found in international trade.

Purpose

Tariffs are taxes levied by a country and charged for sales internationally. They increase the country’s overall income. Other countries often retaliate by also charging an optimum tariff.

Considerations

Only large countries use optimum tariffs and benefit from them. Small countries with small economies do not have optimum tariffs. The tariff in this case is considered zero. Large countries using optimum tariffs, however, are considered to have a positive tariff because of the effect on trade.

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Effects

While these tariffs were designed to increase a country’s wealth, a common effect is a decrease in demand for products offered by the country.

About the Author

Jennifer VanBaren started her professional online writing career in 2010. She taught college-level accounting, math and business classes for five years. Her writing highlights include publishing articles about music, business, gardening and home organization. She holds a Bachelor of Science in accounting and finance from St. Joseph's College in Rensselaer, Ind.

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