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Ad Valorem Tariff

Trading Term

An ad valorem tariff is a type of tax imposed on imported goods, calculated as a percentage of the item’s value. Unlike specific tariffs, which are based on a fixed fee per unit, ad valorem tariffs fluctuate with the price of the goods. For example, if a country imposes a 10% ad valorem tariff on imported cars, a car valued at $20,000‍ would incur a tariff of $2,000‍. This method allows the tariff to adjust automatically with inflation or changes in market value, providing a flexible tool for governments to regulate trade and protect domestic industries.

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