A Primer on Tariffs

Summary

This practice note discusses tariffs, which are customs duties imposed on imported goods. Tariffs may be ad valorem duties based on value, specific duties based on quantity, or compound duties combining both methods. Governments use tariffs to raise revenue, protect domestic industries, address unfair trade practices, pursue national-security or foreign-policy objectives, and obtain leverage in trade negotiations. Historically, customs duties were a principal source of federal revenue in the United States. Modern U.S. tariff policy is implemented through the Harmonized Tariff Schedule of the United States and statutes authorizing specified executive action.