Ad Valorem Tariff


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Ad Valorem Tariff

A tax on an import calculated as a percentage of the value of the import. This contrasts with tariffs on the weight, size, or quantity of the import. Like all tariffs, ad valorem tariffs are controversial, with opponents arguing that they are economically inefficient. See also: Ad Valorem Tax.
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If a 60% ad valorem tariff has as its purpose to keep a product out of a country, the tariff is a protective tariff.
They could boost the customs valuation of these goods, inflating ad valorem tariffs.
Congress had put in place an American Selling Price (ASP) tariff system in 1909, replacing ad valorem tariffs based on invoice prices by tariffs based on what the imported commodity would cost to produce in America.
With his decision to impose a maximum of 30% ad valorem tariffs as opposed to the 40% requested by the steel lobby, the President split the difference between free trade and total protectionism.