ABSTRACT
All goods imported into the United States are subject to duty or duty-free entry, depending on their classification under the applicable tariff schedule and their country of origin. For dutiable products, three different methods are used to levy tariffs:
Ad valorem duty: The duty levied is a percentage of the value of the imported product. It is the type of duty most often applied. An example would be a 2 percent ad valorem on imports of leather shoes. The duty obligation is proportional to the value of the dutiable cargo and bears no relation to the quantity imported.
Specific duty: This duty rate is based on the physical unit or weight or other quantity. Such duty applies equally to low- and high-priced goods. To the extent that the same duty rate is applied to similar goods with different import prices, specific duties tend to be more restrictive of low-priced goods. When the price of imports rises, the rate remains unchanged, and, subsequently, the effect of the specific duty declines. Examples would be a $9.00 per ton (wheat) or $2.50 per dozen (fountain pens) charges.
Compound duty: Compound duty combines both ad valorem and specific duty. An example would be $2.00 per pound and 4 percent ad valorem (chicken imports).
