With a compound tariff, the "specific" portion neutralizes the cost disadvantage of domestic manufacturers that results from tariff protection granted to domestic suppliers of raw materials, and the "ad valorem" portion grants protection to the finished-goods industry.

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Quizplus · Accepted Answer

This is true. The compound tariff has both a specific and ad valorem component, with the specific portion offsetting any cost disadvantage for domestic manufacturers who are protected by tariffs on raw materials while the ad valorem portion protects the finished-goods industry.

With a Compound Tariff, the "Specific" Portion Neutralizes the Cost