What grade is used when determining towing capacity?

10% would be a extreme grade; the worst Interstate grades I know are 6% to 7%, Grapevine (I-5) and Baker Grade (I-15.)

I don't know what truck you have, but just about any vehicle can go up any road.  Speed matters.  When going up a steep road, you need to drop down to a lower gear and drive at a lower speed.  Going up the Grapevine semi-tractor/trailer "AKA Big Rigs) do about 40 mph up the hill.  As do most RVs and pickup/trailers.

If you redline at top speed up a steep road you *will* have engine/transmission failure. 

The towing capacity is about weight A (the powered towing vehicle) towing weight B. 

Some people might tow 10,000 pounds with a 4,000 pound pickup truck, but it could have a dangerous outcome. 

A proper "tongue weight" could be too much for the towing vehicle rear suspension.  The brakes might not handle the trailer weight if not properly equipped with surge brakes or electric brakes. 

The power of the towing vehicle would surely be tested if going up a steep grade.  And the weight and braking and suspension would surely be tested coming down a steep grade.  Add bad weather to the situation. 

Personally, I wouldn't tow more than about 50% of the tow vehicle weight. 

There is a lot involved.  More than you might consider.  Automatic transmissions can make a lot of extra heat in the torque converter when towing.  A transmission cooler might be necessary.  High wind on the side of a large area trailer can cause big problems. 

Consult the manufacturer if you are not totally understanding towing limitations.  Most trailer stores can keep you safe.  Just have a talk. 

-Driving since 1969 

-Towed a lot of trailers

37%, of course.

Canton Avenue is 630 ft (190 m) long (the hill is about 65 meters long) and is claimed to include a 37 percent grade 21 ft (6.4 m) feet long. According to the Guinness Book of World Records, Baldwin Street, in Dunedin, New Zealand, is the world's steepest street with a gradient of 34.8 percent.

The rating is for any use.  It limits damage to the engine or transmissionl.

The tow amount is for all terrains. NOT specific to road grades.