# How do Trade Costs work in International Trade?

I'm currently reading a paper about trade costs in international trade, but I really struggle to understand the following passage:

A rough estimate of the tax equivalent of “representative” trade costs for industrialized countries is 170 percent. This number breaks down as follows: 21 percent transportation costs, 44 percent border-related trade barriers, and 55 percent retail and wholesale distribution costs (2.7=1.21∗1.44∗1.55).

1. What does "tax equivalent of representative trade costs" mean?
2. "Trade costs for industrialized countries is 170 percent" of what?
3. How can trade costs exceed 100%?

Please help me out, I'm really loosing my sleep on this one!

The calculation is trying to find the equivalent to an ad valorem tax by which the price of manufacture increases by the time of retail sale. Essentially it is saying transportation multiplies price by $1.21$ (a $21\%$ increase), tariff and non-tariff border related trade barriers multiply by $1.44$ (a $44\%$ increase), and retail and wholesale distribution costs multiply by $1.55$ (a $55\%$ increase) combining to multiply by $1.21\times 1.44\times 1.55=2.7$ (a $170\%$ increase).
This figure being over $100\%$ is not an issue. For example you could imagine a high tax on a packet of bottle of perfume costing $\$10$before tax: if the tax rate was$170\%$ad valorem this would add$\$17$ tax and make the after-tax price $\$27\$.