Definition of optimum tariff

Written by jennifer vanbaren | 13/05/2017
Definition of optimum tariff
(Thinkstock Images/Comstock/Getty Images)

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


An optimum tariff is designed to increase the wealth of a country. Tariffs are taxes levied by a country and charged for sales internationally. Tariffs increase the country's overall income. Often other countries retaliate by also charging an optimum tariff. In this case neither country really benefits through the imposition of optimum tariffs.


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.


While these tariffs were designed to increase a country's wealth, in reality this is true only when other countries do not raise their tariffs. A common effect is a decrease in demand for products offered by those countries.

  • All types
  • Articles
  • Slideshows
  • Videos
  • Most relevant
  • Most popular
  • Most recent

No articles available

No slideshows available

No videos available

By using the site, you consent to the use of cookies. For more information, please see our Cookie policy.