Share This Article:

Economic Definition of ad valorem tariff. Defined.

Offline Version: PDF

Term ad valorem tariff Definition: A tax on imports that is specified as a percentage of the value of the good or service being taxed. This is one form of trade barrier that's intended to restrict imports into a country. Unlike nontariff barriers and quotas, which increase prices and thus revenue received by domestic producers, an 'ad valorem tariff' generates revenue for the government. For example: a 15 percent ad valorem tariff on a TV set worth $100 would pay a tariff of $15. One advantage of an ad valorem tariff is that it keeps up with changes in prices (mostly inflation).


« AD curve | ad valorem tax »


Alphabetical Reference to Over 2,000 Economic Terms