How does Tariff Works?

The tariff tax is different for different products. It is a tax or duty levied on imported goods by the domestic government. They are imposed as a percentage of the given value of the good, just like a sales tax. But unlike the sales tax, rate of tariff is different for each good. Also, they are not applicable to domestic goods whereas sales tax is.
There are generally two types of tariffs. Ad valorem tariffs are measured as a fixed percentage of the value of the imported good. When the international price of a good rises or falls, so does the tariff. So, tariff varies with price in case of Ad valorem tax. A specific tariff is a fixed amount of money that does not vary with the price of the good. In some cases, both the ad valorem and specific tariffs are levied on the same product. For example, suppose an Indian Company wants to export a certain good priced $100 per unit to US. The US government charges Ad valorem tax @ 20% or a specific tax of $30. With Ad valorem tax, he has to pay $20 and with specific tax, he has to pay $30 to the US government.