A compound duty combines both an ad valorem component (a percentage of value) and a specific component (a fixed amount per unit). Both components are owed on the same entry — the calculations are additive, not alternative.
The formula:
Duty owed = (Customs value × Ad valorem rate) + (Quantity × Specific rate)
Compound duties are most common in textiles, apparel, footwear, and certain agricultural products. A representative example:
- HTS 6402.99.90.65 (Women's footwear with outer soles and uppers of rubber/plastic, valued over $12/pair): rate of 76.5¢/pair + 32%
- A 1,000-pair entry valued at $20,000 would owe: (1,000 × $0.765) + ($20,000 × 0.32) = $765 + $6,400 = $7,165
The structure is a legacy of mid-20th-century U.S. tariff legislation, where Congress combined protective specific rates (designed to shield domestic producers from low-cost imports) with revenue-generating ad valorem rates. Many compound tariff lines have survived multiple rounds of GATT/WTO negotiations and remain in effect today.
A distinct (but related) concept is the alternative duty: where the HTSUS lists two rates (e.g., "10% or 50¢/kg, whichever is greater"), the importer pays the higher of the two. These are sometimes called "either/or" duties and appear in a handful of agricultural lines — they are not compound duties because only one rate is paid, not both.
For compound duty classification work, both the value and the quantity must be accurately reported on the Entry Summary. The unit of quantity matters for the specific component — pairs, kilograms, dozens, etc. — and is controlled by the column-1 unit-of-quantity specification in the HTSUS for each tariff line.
Compound duties are particularly important to model precisely because the per-unit component can dominate the calculation on low-value shipments and become trivial on high-value shipments — landed-cost outcomes shift accordingly.