Import Duties
Also known as: Import Tariffs, Customs Tariffs, Import Tax
Definition
Import duties are taxes charged by a government when goods are brought into the country from abroad. These duties serve to generate revenue and protect domestic industries from foreign competition.
How Import Duties Work
- Product classification - Item assigned an HS code
- Rate determination - Duty rate looked up in tariff schedule
- Value calculation - Usually based on transaction value
- Duty calculation - Rate × value = duty owed
- Payment - Paid before goods are released
Types of Import Duties
Ad valorem duties:
- Percentage of product value
- Most common type
- Example: 5% duty on $1,000 = $50
Specific duties:
- Fixed amount per unit
- Based on quantity, weight, or volume
- Example: $2 per kilogram
Compound duties:
- Combination of ad valorem and specific
- Example: 10% + $1 per unit
US Duty Rate Examples
| Product Category | Typical Rate |
|---|---|
| Electronics | 0-5% |
| Clothing/textiles | 10-32% |
| Footwear | 8-48% |
| Furniture | 0-10% |
| Toys | 0-6% |
| Auto parts | 2.5-4% |
| Jewelry | 5-14% |
| Handbags | 8-20% |
Note: Rates vary by specific product and country of origin.
Factors Affecting Duty Rates
Product classification:
- Exact HS code determines rate
- Similar products may have different rates
- Classification can be disputed
Country of origin:
- Trade agreements reduce rates
- Tariffs may target specific countries
- Preferential rates for certain origins
Value:
- Transaction value (price paid)
- Includes commissions and royalties
- May exclude shipping (depends on country)
Trade Agreements and Duty Relief
Free Trade Agreements (FTAs):
- USMCA (US, Mexico, Canada) - 0% on qualifying goods
- US-Korea FTA - Reduced or eliminated duties
- CAFTA-DR - Central American duty reductions
Requirements for FTA benefits:
- Certificate of origin
- Qualifying rules of origin
- Direct shipment (some agreements)
- Proper documentation
Calculating Import Duties
Step 1: Determine HS code (6-10 digits) Step 2: Look up duty rate for that code Step 3: Determine customs value Step 4: Calculate: Value × Rate = Duty
Example
Importing leather handbags from Italy to US:
- HS code: 4202.21.60
- Duty rate: 9%
- Value: $5,000
- Duty: $5,000 × 9% = $450
Common Mistakes
- Wrong HS code - Leads to wrong rate
- Undervaluing goods - Illegal and penalized
- Ignoring origin requirements - Lose FTA benefits
- Forgetting about related costs - Some add to dutiable value
- Not checking for changes - Rates change over time
Resources for Duty Rates
- US: USITC HTS database
- EU: TARIC database
- UK: UK Trade Tariff
- Canada: CBSA tariff finder
- Duty calculators: SimplyDuty, Avalara
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