An ad valorem duty (Latin for "according to value") is a duty calculated as a percentage of the customs value of imported merchandise. It is the most common form of duty in modern tariff schedules — the great majority of U.S. HTSUS tariff lines are ad valorem.
The formula is straightforward:
Duty owed = Customs value × Ad valorem rate
For example, a $100,000 shipment of furniture classified at HTS 9403.20.00.90 (Column 1 General rate of 0%) would owe $0 in base duty — but layered Section 301 tariffs (currently 25% ad valorem for List 1 China-origin goods) would add $25,000 on the same entry.
Ad valorem rates dominate modern tariff schedules for several reasons:
- Inflation-neutral — Specific duties erode in real terms over time; ad valorem doesn't
- Trade-policy responsive — Easier to negotiate in trade agreements and to use as policy instruments
- Administratively simple — Calculated directly from the invoice; no separate weighing or measurement
The customs value used in the ad valorem calculation is determined by the transaction value method under 19 U.S.C. § 1401a — generally the price actually paid or payable for the goods, with statutory additions and exclusions.
Most U.S. trade remedies are also ad valorem:
- Section 301 — typically 7.5%, 25%, or higher
- Section 232 steel/aluminum — 25% / 10% (with various exclusions)
- Antidumping and countervailing duties — typically ad valorem, sometimes very high (100%+ for some Chinese commodities)
Compare to specific duties (fixed amount per unit) and compound duties (combination of ad valorem and specific).