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The Customs Tariff is based on the World Customs Organization's (WCO) Harmonized Commodity Description and Coding System (HS) and its impact of industry competitiveness is known for everyone. In this paper, by considering IRAN I.R. industries,the impact of change in custom tariff on domestic industries have been analyzed. Many models have been used to analys and evaluate the effect of change in custom tariff on domestic industries. In this paper System Dynamics(SD) approach and modeling has been used to describe this problem. By using Casual Loops(CL) and also Stock And Flow diagram(CFD), the model of problem has achived. At next step, depending on the type of variables(State variable, Rate variable, Auxiliary variable, parameters, …) the relation of variables are identified and the model is completed. At final step the model was sumilated and run by VENSIM software and the results were outcomed. This paper declares that decreasing the custom tariff will improve domestic industries competitiveness in long terms by developing the infrastructure of domestic industry for gaining more market share