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Trade Agreements, Origin & Policy

Preferential Tariff

Also known as: Preference, Preferential Rate

A preferential tariff is a reduced or zero duty rate that one country grants to goods originating in another under a free trade agreement or a unilateral preference program, in place of the standard rate applied to imports generally. To claim a preference, the importer must show that the goods satisfy the relevant rules of origin and, usually, present a valid certificate or declaration of origin. Preferential rates can transform the economics of a supply chain, and the difference between the preferential and standard rate is often what makes sourcing from a particular country commercially viable.

The JFS takeLicensed customs broker · Filer 82G

The duty difference between two sourcing options is frequently larger than the unit-cost difference that drove the decision. Model it before you commit to a supplier, not after.

Related terms

Most Favored NationMost favored nation, also called normal trade relations, is the core non-discrimination principle of the multilateral trading system: a country that grants a tariff concession or favorable treatment to one trading partner must extend the same treatment to all other members.Rules of OriginRules of origin are the legal criteria used to determine the economic nationality of a product for the purpose of applying tariffs, preferences, quotas, and trade-remedy measures.Certificate of OriginA certificate of origin is a document attesting to the country in which the goods were produced or manufactured, used to satisfy customs requirements, support claims for preferential tariff treatment under a trade agreement, or meet the terms of a letter of credit.

Reviewed by a licensed customs broker. Definitions are general information, not legal or customs advice for a particular shipment. Duty rates, tariff programs and agency requirements change frequently.