What Is the Difference Between a Tariff and a Duty?

A timely clarification for when trade policy decides to keep importers on their toes.

With blanket tariffs making headlines again and compliance officers reaching for the antacids, there’s no shortage of confusion about trade terminology. One of the most common questions we hear, especially in light of the Trump-era tariffs being revisited, is this: What’s the difference between a tariff and a duty?

The short answer?

Not much. But enough to matter, especially if you’re trying to explain to your CFO why your landed costs just went up 25%.

Let’s clear it up.

The Basics: All Tariffs Are Duties, But Not All Duties Are Tariffs

The term duty refers to any tax imposed on imported goods. 

Duties are what U.S. Customs and Border Protection (CBP) collects at the time of entry. They’re assessed based on the product’s HTS classification, country of origin, value, and any applicable trade programs or restrictions.

A tariff, on the other hand, is a specific type of duty usually imposed as part of a broader trade policy or retaliatory measure. It’s often used interchangeably with “duty” in public discourse, but technically, a tariff is a policy tool that results in a duty rate.

Think of it in this extraordinarily simplistic this way:

• The tariff is a rate, or the formula used to calculate the duty.

• The duty is an amount calculated based on the tariff.

Types of Duties

In the US, duties come in three flavors.

• Ad valorem
  • This tariff is defined as a percent of the customs value.  A tariff of 10% on a $1.00 item results in a duty of 10¢.
• Specific
  • This tariff is based on a predefined quantity.  A tariff of 10¢/kg on a shipment of 10 kg results in a duty of $1.00.
• Compound
  • This is a combination of the above.  I wrote my MBA thesis on importing watches from Taiwan. So I learned about watches in the HTSUS.  The rate of duty for watches classified in 9101.11.40 is “51¢ each + 6.25% on the case and strap, band or bracelet + 5.3% on the battery.”  Wow.

Types of Tariffs

Tariffs also come in various flavors and the three most common are:

• They can be based on what the item is, as defined by the item’s HTSUS classification
• They can be based on the country of origin of the item being imported, plus on the item’s HTSUS classification
  • For example: a 50% ad valorem duty on all goods from China 
• They can be based on the industry, with the industry defined by certain HTSUS codes
  • For example: a 25% ad valorem duty on all imports of foreign-made automobiles

Where It Gets Complicated: Section 301, 232, and Beyond

Here’s where importers tend to feel the difference.

The HTSUS (Harmonized Tariff Schedule of the United States) contains the general duty rates for products based on classification and origin. These are the regular, baked-in duties you pay on most imports, which are often just a few percentage points.

Tariffs, on the other hand, tend to show up suddenly, with press conferences.

Examples include:

• Section 301 tariffs, imposed on practically all goods from China
• Section 232 tariffs, imposed for national security reasons (steel and aluminum, with copper and wood in the pipeline)
  • The proposed 25% tariffs on foreign-made automobiles currently back in the conversation is also done under Section 232.
• IEEPA tariffs, which have been extremely volatile, and include the reciprocal tariffs, plus the additional tariffs levied against China

These are layered on top of your normal duties. So a product that once had a 2.5% duty might suddenly carry an effective rate of 27.5%, seemingly overnight.

And yes, they call it a “duty” in the entry paperwork. But when it’s triggered by a Section 301 action and tied to geopolitical strategy, it’s more accurate to say you’re paying a tariff.

Why It Matters

Aside from semantic clarity, understanding the difference can help you:

• Interpret CBP communications and tariff schedules correctly
• Know whether you’re dealing with standard classification issues or policy-driven cost increases
• Identify opportunities for exclusions, duty recovery, or strategic sourcing

It also helps when you’re talking to stakeholders who may hear the word “tariff” and assume something went wrong. Sometimes the duty rate changed. Sometimes the trade environment did.

Knowing the difference allows you to respond with facts, not guesswork.

Don’t Let the Terms Blur the Bigger Picture

What matters more than the label is the impact. Whether it’s called a duty or a tariff, the result is the same: your goods are more expensive, and your compliance risk just increased.

O’Meara & Associates helps companies navigate both the everyday mechanics of duty calculation and the more volatile side of tariff policy. From HTS classification and country of origin strategy to understanding how and when Section 301 applies, we’re here to help you keep costs under control and surprises off your import documents.

Have questions about how tariffs are affecting your products? Contact O’Meara & Associates today, and let’s take a look before it shows up on your invoice.