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There are several types of **tariff rates**. *Ad valorem tariffs* are calculated as a percentage of the value of the goods – this is the most common type. Then there are *specific tariffs*, which are a fixed amount per unit, like $1 per kilogram. *Compound tariffs* are a mix of both. Tariffs serve a variety of purposes. They can protect domestic industries by making imported goods more expensive, which encourages consumers to buy local products. They can also generate revenue for the government. However, tariffs can also lead to trade wars, increased prices for consumers, and reduced trade volume. Basically, tariffs are a critical tool in a government's economic toolbox, but they can be a double-edged sword.
