How are tariffs typically calculated?

Tariffs are typically calculated using two main methods: ad valorem and specific tariffs. Ad valorem tariffs are calculated as a percentage of the value of the goods being imported, while specific tariffs are fixed amounts charged per unit of the goods. This dual structure allows countries to impose tariffs based on either the overall value of the imported goods or a set rate that applies to each unit.

This approach allows for flexibility in trade policy and helps ensure that tariff revenues are collected in a manner that can be adjusted based on the type of goods and their values. For instance, a country might implement a high ad valorem tariff on luxury items to generate significant revenue based on sales figures, while also applying specific tariffs on bulk commodities to control the price per unit.

The other alternatives do not adequately capture this dual methodology used in tariff calculations. While tariffs might consider the country of origin, such classification is generally part of the broader rules of origin and trade agreements rather than the calculation method itself. The focus is primarily on either the value of the goods or a specific unit rate.