Compound tariff
Also called: Compound duty · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
A compound tariff charges two duties on the same good at the same time. One part is ad valorem, a percentage of the good's value. The other part is specific, a fixed amount per unit such as per kg. The importer pays both, so the duty keeps some protection when prices fall and also rises with inflation.
Example
Take a tariff of 10% + ₹20 per kg on 100 kg of goods worth ₹10,000. The duty is ₹1,000 (10% of value) plus ₹2,000 (₹20 × 100 kg), which makes ₹3,000.
Don't confuse with
- Mixed tariff: this charges the ad valorem duty or the specific duty, whichever is higher (or lower), never both. A compound tariff charges both together.
Related concepts
- Tariff
- Ad valorem tariff
- Specific tariff
- Mixed tariff
- Export duties
- Duty drawback
- Tariff escalation
- Tariff peak
- Effective rate of protection
- Bound tariff rate