Customs duty purpose

Customs duty plays an integral role in imports/exports.

First, it serves as a key source of revenue for fostering the economic growth of a country.

In other words, it provides a source of income for governments to budge in different sectors of economic growth.

Originally, this was the main function of this type of duty on imports and exports.

However, with time it has become a passive function, especially for developed nations.

Secondly, this type of duty serves as a trade policy tool, which helps in protecting domestic industries.

It happens by ensuring it alters some specific conditions under which the goods compete in the local market.

For instance, you might find some authorities imposing low or zero duties to imports up to a specific volume.

Nonetheless, the same authorities may apply relatively high rates to imports, which surpass the quota level.

Thirdly, customs duty on imports/exports serve as a remedy to trade distortions.

And this is from the aspects of punitive function for the dumping of goods or products.

Significantly, this duty helps in regulating the particular products getting into the country, hence preventing prohibited goods.