Final answer:
Custom duties based on a percentage of the value of the goods are known as ad valorem tariffs, a type of tax used by governments to protect domestic industries by making imports more costly.
Step-by-step explanation:
Custom duties that are based on a percentage of the value of the goods are known as ad valorem tariffs. These tariffs are a type of tax imposed by governments on imported goods in an effort to raise revenue while protecting domestic industries.
By basing the tax on the value of the goods, ad valorem tariffs make these imports more expensive, which can discourage consumers from purchasing foreign items and encourage them to buy domestic products instead.
This method stands in contrast to specific tariffs, which are levied as a fixed fee based on the quantity (such as per kilogram or per item) of an imported good.