What is an ad valorem duty?
A duty charged as a percentage of the goods' customs value, such as 3.4%.
Most HTS rates are ad valorem. The duty is the rate times the customs value: a shipment valued at $12,000 under a 3.4% rate owes $408.
Other rates are specific (a fixed amount per unit, such as 1.8¢/kg) or compound (both, such as 2.2¢/kg + 3%). Specific rates do not change when the price changes, so their effective percentage falls as the goods get more expensive.
Section 301 and most other additional duties are also ad valorem and are calculated on the same customs value, then added to the Column 1 duty.
Example: $12,000 customs value × 3.4% general rate = $408 duty. With a 25% Section 301 duty on top: $12,000 × 25% = $3,000 more, $3,408 in total (fees such as MPF are separate).
Sources
Related terms
- Customs value (transaction value)The value duty is charged on. In the US it is normally the transaction value: the price actually paid or payable, plus certain additions.
- Section 301 tariffsAdditional US duties imposed under Section 301 of the Trade Act of 1974 in response to a foreign country's unfair trade practices; best known for the tariffs on goods from China since 2018.
- Merchandise Processing Fee (MPF)A CBP user fee of 0.3464% of the customs value on formal entries, with a minimum and maximum per entry that CBP adjusts each fiscal year.