The Key Definitions
A tariff is a government-imposed charge on imported goods — it is the policy. A duty is the specific amount of money owed under that tariff — it is the bill. A tax is a broader government charge on economic activity — tariffs are a specific type of tax. In practice, "tariff" and "duty" are used interchangeably in U.S. customs law and trade discussions, and both refer to charges on imports assessed by Customs and Border Protection.
Understanding these terms matters because they appear throughout customs documentation, trade agreements, news coverage, and business conversations — often used loosely or incorrectly. This guide clarifies the precise distinctions and explains how each term applies in real-world importing.
Tariff
A tariff is a charge imposed by a government on goods entering its country. The United States sets its tariff rates through the Harmonized Tariff Schedule (HTS), which assigns a specific duty rate to every product that can be imported. Tariffs serve two primary purposes: generating revenue for the government and protecting domestic industries from foreign competition.
When policymakers say "we are imposing a 25% tariff on steel imports," they are establishing a policy — a rate that will be charged on all qualifying steel imports entering the country. The tariff itself is the rule; the money collected under that rule is the duty.
Duty
A duty is the specific dollar amount owed to the government on a particular import shipment. It is calculated by applying the tariff rate to the customs value of the goods. For example, if the tariff rate on a product is 10% and the customs value of a shipment is $50,000, the duty owed is $5,000.
In U.S. customs practice, "duty" and "tariff" are used interchangeably in most contexts. CBP officers, customs brokers, importers, and trade attorneys all use phrases like "the duty rate is 10%" and "the tariff rate is 10%" to mean the same thing. The distinction between the policy (tariff) and the payment (duty) exists in theory but rarely matters in daily practice.
Tax
A tax is a broad category of government-imposed charges on economic activity. Income tax, sales tax, property tax, and excise tax are all types of taxes. A tariff is also a type of tax — specifically, a tax on imported goods. What distinguishes tariffs from other taxes is their scope: tariffs apply only to goods crossing an international border, and they are collected by the customs authority (CBP in the United States) rather than by the IRS or a state tax agency.
Comparison: Tariff vs. Duty vs. Tax vs. Fee
| Term | Who Imposes It | What It Applies To | Who Pays | How Calculated |
|---|---|---|---|---|
| Tariff | Federal government (via HTS) | Imported goods | Importer of record | Percentage of customs value, per-unit, or both |
| Duty | CBP (collecting under the tariff) | Specific import shipment | Importer of record | Tariff rate applied to customs value |
| Tax | Federal, state, or local government | Income, sales, property, or other economic activity | Varies by tax type | Varies by tax type |
| Fee | CBP or other agency | Import transaction (not the product) | Importer of record | Flat rate or formulaic (e.g., MPF: 0.3464% of value) |
Practical takeaway: In conversations about importing, "tariff" and "duty" mean the same thing. "Tax" is the broader category. "Fee" refers to administrative charges (MPF, HMF) that are separate from the duty on the goods themselves.
Types of Tariffs
The United States uses several different methods to calculate tariffs. Understanding these types is important because the method of calculation directly affects how much you pay.
Ad Valorem Tariffs
An ad valorem tariff is expressed as a percentage of the customs value of the imported goods. This is the most common type of tariff in the U.S. tariff schedule. For example, an ad valorem tariff of 10% on a shipment valued at $100,000 produces a duty of $10,000. The word "ad valorem" is Latin for "according to value."
Ad valorem tariffs are straightforward to understand but require accurate customs valuation. If the declared value is incorrect — whether intentionally or through error — the duty amount will also be incorrect, potentially triggering CBP penalties for undervaluation or costing the importer money through overvaluation.
Specific Tariffs
A specific tariff is expressed as a fixed dollar amount per unit of quantity — per kilogram, per liter, per piece, per square meter, and so on. For example, a specific tariff might be $0.50 per kilogram. If you import 10,000 kilograms, the duty is $5,000 regardless of the value of the goods.
Specific tariffs are common for agricultural products, beverages, and certain raw materials. They provide a fixed, predictable duty amount that does not fluctuate with market prices. However, they can result in disproportionately high effective rates for low-value goods and disproportionately low effective rates for high-value goods.
Compound Tariffs
A compound tariff combines both ad valorem and specific elements. For example, a compound tariff might be "5% ad valorem plus $0.20 per kilogram." This structure captures both the value-based and quantity-based aspects of the import. Compound tariffs are less common but appear throughout the HTS, particularly for agricultural and processed food products.
Types of Duties
Beyond the standard tariff rates in the HTS, several categories of duties can apply to imported goods depending on their country of origin, trade policy status, and the specific circumstances of the import.
Most Favored Nation (MFN) Duties
MFN duties, also called Normal Trade Relations (NTR) duties in U.S. law, are the standard duty rates applied to imports from most countries. These are the "general" rates listed in Column 1 of the Harmonized Tariff Schedule. Most U.S. trading partners receive MFN treatment, which means their goods are subject to these standard rates rather than the higher rates reserved for countries that do not have normal trade relations with the United States.
Preferential Duties
Preferential duties are reduced or zero-rate duties available under free trade agreements and preference programs. The United States-Mexico-Canada Agreement (USMCA), for example, provides duty-free treatment for qualifying goods traded among the three countries. To claim preferential duty rates, the goods must meet specific rules of origin requirements, and the importer must have a valid certificate of origin or other qualifying documentation.
Antidumping and Countervailing Duties (AD/CVD)
Antidumping duties are imposed on goods that are sold in the United States at less than their fair market value in the exporting country. Countervailing duties are imposed on goods that benefit from government subsidies in the exporting country. AD/CVD rates can be extremely high — sometimes exceeding 200% — and are assessed in addition to the regular duty rate. These duties are specific to certain products from certain countries and are determined through investigations conducted by the U.S. Department of Commerce and the International Trade Commission. For more on AD/CVD, see our guide on antidumping and countervailing duties.
Section 301 Tariffs
Section 301 of the Trade Act of 1974 authorizes the President to impose tariffs in response to unfair trade practices by foreign governments. The most significant application of Section 301 in recent history is the tariffs imposed on Chinese goods beginning in 2018, which currently cover hundreds of billions of dollars in annual imports at rates ranging from 7.5% to 100%. These tariffs are assessed in addition to the regular MFN duty rate, creating a stacking effect that can dramatically increase the total duty burden. For current Section 301 tariff rates and their impact, see our Section 301 analysis.
Section 232 Tariffs
Section 232 of the Trade Expansion Act of 1962 authorizes the President to impose tariffs on imports that threaten national security. The most prominent Section 232 tariffs are the 25% tariff on steel imports and the 10% tariff on aluminum imports imposed in 2018, with subsequent increases on certain countries. Like Section 301 tariffs, Section 232 tariffs are assessed on top of the regular duty rate.
How Tariffs Are Calculated
The amount of duty owed on an import shipment is determined by two factors: the tariff rate and the customs value of the goods. The basic formula is straightforward.
Duty = Tariff Rate x Customs Value
For an ad valorem tariff of 10% on goods with a customs value of $50,000, the duty is $5,000. For a specific tariff of $0.50 per kilogram on 10,000 kilograms, the duty is $5,000. For a compound tariff of 5% plus $0.20 per kilogram on goods worth $50,000 weighing 10,000 kilograms, the duty is $2,500 + $2,000 = $4,500.
However, the complexity lies in determining the correct tariff rate (which requires accurate HTS classification) and the correct customs value (which requires proper valuation under CBP's rules). Additionally, special tariffs — Section 301, Section 232, AD/CVD — stack on top of the base rate, meaning the effective tariff rate can be much higher than what appears in the HTS.
For example, a product classified under an HTS code with a 5% MFN duty rate that is also subject to a 25% Section 301 tariff has an effective tariff rate of 30%. If the customs value is $100,000, the total duty is $30,000 — not the $5,000 that the base rate alone would suggest. For a detailed look at how tariffs are stacking in the current trade environment, see our 2026 tariff stacking analysis.
Where Tariff Revenue Goes
All tariff revenue collected by CBP is deposited into the U.S. Treasury. In fiscal year 2025, CBP collected approximately $264 billion in duties, taxes, and fees — making it one of the largest revenue-generating agencies in the federal government.
Tariff revenue is not earmarked for specific purposes. It goes into the general fund and is used for all federal spending, just like income tax revenue. The exception is the Harbor Maintenance Fee (HMF), which is deposited into the Harbor Maintenance Trust Fund and used for harbor maintenance and dredging projects.
The significant increase in tariff revenue in recent years — driven largely by Section 301 and Section 232 tariffs — has made tariff policy a more prominent part of federal fiscal discussions. However, it is important to note that this revenue comes from U.S. importers, not from foreign governments. For more on who pays tariffs, see our dedicated guide.
Customs Fees: Not Tariffs, but You Still Pay Them
In addition to tariffs and duties, importers pay several customs fees that are technically distinct from duties but still add to the cost of importing.
Merchandise Processing Fee (MPF)
The MPF is assessed on all formal entries at a rate of 0.3464% of the customs value of the goods, with a minimum of $31.67 and a maximum of $614.35 per entry. The MPF covers CBP's costs for processing commercial imports.
Harbor Maintenance Fee (HMF)
The HMF is assessed on all imports arriving by ocean vessel at a rate of 0.125% of the customs value. There is no cap on the HMF. This fee funds harbor maintenance and dredging projects through the Harbor Maintenance Trust Fund.
These fees are not tariffs — they do not vary by product classification or country of origin, and they serve a different purpose (funding CBP operations and harbor maintenance rather than implementing trade policy). But they are part of the total cost of importing and are paid by the importer of record alongside any duties owed.