Tariffs 101

Ask “What is a tariff?” and the majority of people will scratch their heads and answer that a tariff is a tax, and the conversation will most likely end there. While a tariff may be considered a tax,  in the U.S., it is considered a “duty” assessed on imported goods, and there are actually five main types of tariffs. Tariffs are used by a country as a way to protect developing industries, protect consumers, place barriers on other countries, raise revenue, and even as a form of retaliation against a country with which there is international conflict. The following provides a brief primer on tariff law in the U.S., and how the attorneys at the Law Offices of Paula M. Connelly can help you if you’ve been accused of violation any tariff, customs, or importation laws.

Ad Valorem Tariffs

Ad valorem tariffs are a tax on goods that is based solely on the goods’ net worth, and a percentage of that worth. An example of an ad valorem tariff would be this: a 10 percent tariff levied on the importation of bananas from Central America. If one banana was priced at $1.00, then the tariff would be $0.10. However, if the price of a banana increased to $1.50, then the tax would be $0.15.

Specific Tariffs

Unlike ad valorem tariffs, specific tariffs are taxes that are levied an imported good based on the quantity of the goods, not the goods’ estimated value. Quantity can refer to a specific number of goods (i.e. 10 bananas), a volume, or a weight. As such, this type of tariff varies greatly depending upon the type of good that’s imported.

Compound Tariffs

Compound tariffs consist of a combination of an ad valorem tariff and a specific tariff.  For example, various types of footwear can be assessed a compound tariff of 90 cents/pair plus 37.5%, thus one can understand the high costs of some footwear!

Revenue Tariffs

As the name of the tariff would imply, the point of a revenue tariff is simply to increase the revenue or a regional or national government by taxing a good that’s being imported. For example, a tariff on oil may be implemented by a country that produces no oil of its own.

Prohibitive and Protective Tariffs

Finally, prohibitive and protective tariffs are the last two most common tariffs used. A prohibitive tariff is a tariff that is so high on a good that it keeps the good from being imported. A protective tariff, on the other hand, is a tariff that is used to increase the price of imported goods as a means of making way for competition. In opposition to all tariff types, free trade is the practice of allowing imported goods to enter a country sans an importation tax. Free trade is thought to increase economic growth possibilities for a business, industry, or country, and is typically associated with coffee beans and chocolate, although it also applies to a number of other goods.

An Attorney Can Help You if You’re Facing Customs or Tariff Violation Charges

If you’re responsible for importing goods, there are a number of customs regulations that you and your business must adhere to. In the event that any customs or tariff laws are violated, the perpetrator may face criminal charges. If you have questions about customs and tariff laws in Boston and the rest of the United States, contact the Law Offices of Paula M. Connelly now for a free legal consultation to get you started. We’re ready to talk today at 781-897-1771.


The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

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