Clashing Over Commerce: A History of US Trade Policy (Markets and Governments in Economic History)

by Douglas A. Irwin

Tariffs can take the form of ad valorem duties (a percentage of the imported good’s value, such as 30 percent) or specific duties (a fixed charge per unit of the imported good, such as $1 per pound or per unit). An important feature of specific duties is that their percentage (ad valorem) equivalent cannot be determined without reference to the price of the imported good. For example, if a specific duty happens to be $5 per imported shirt, then the ad valorem equivalent is 50 percent on a $10 shirt and 10 percent on a $50 shirt. Thus, the ad valorem equivalent of a specific duty is inversely related to the good’s price. Because many tariffs are specific duties, wide swings in import prices have been responsible for large movements in the average tariff during certain periods in history.