Marisol International Transportation & Logistics Blog

Import Customs Duties and Taxes 101

Posted by Chelsea Mitchell on Jun 18, 2015 10:55:24 AM

Customs duties are tariffs or taxes imposed on goods when transported across international borders. The purpose of customs duties and taxes is to control the flow of goods in order to protect each country's economy, residents, jobs and environments. Each product imported into the U.S. has an established duty rate, based on the country of origin and product components. 


The customs duty rate is determined by the commerical invoice value of the goods. However, some commodity duty rates are based on the weight of the product or the number of items in the shipment. 

Sometimes shippers can import products duty free under free trade agreements (FTAs), such as the North American Free Trade Agreement (NAFTA). Another common exemption from duty payment upon importation is when the importer claims Generalized System of Preferences (GSP). There are specific requirements in order to qualify for preferential duty rates under FTAs or GSP, so be sure to click on the above mentioned programs to research the necessary documentation and other criteria. 

So how can importers find out the designated duty rate for the product they plan to import?

The Harmonized Tariff System (HTS) is a reference manual which provides duty rates for virtually every item that exists. Harmonized Tariffs are expressed as 4-digit headings and subordinate 6-digit subheadings. Most countries use the same 6-digit code, however, a country can assign its own additional 4 numbers, making the entire code 10 digits. The HTS encompasses 97 chapters within 22 sections, segmenting goods into similar groups. 

With this being said, the HTS should be used as a guideline as U.S. Customs and the government utimately has the final say in duty rates charged on imports.

When goods are dutiable, three different types of rates may be assessed: ad valorem, specific, or compound rates.

  • An ad valorem rate, which is the type of rate most often applied, is a percentage of the value of the merchandise, such as five percent of the value.
  • A specific rate is a specified amount per unit of weight or other quantity, such as 5.9 cents per dozen.
  • A compound rate is a combination of both an ad valorem rate and a specific rate. 

Importers are allowed to decide how they will pay customs duties. Importers can delegate duty payment to their customs broker, with the broker later invoicing the importer for duties paid. Importers may also elect to have the duty payments automatically withdrawn from their bank. If shippers are one-time importers or choose not to have their brokers handle duty payments, customs duties and taxes will be collected at the time of customs clearance at the port of entry. 

It is important for shippers to know the duty rate which will be assessed on any incoming shipment. This insight allows importers to estimate import costs, ensuring profitability. 

Allow Marisol International to handle your customs duties payments with compliance and peace of mind. Continuous training and dedicated account managers guarantees your import shipments are classified correctly, reducing customs fines and penalties. Contact us today for more information on customs duties and HTS classification compliance. 

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Topics: Importing, Customs Duties and Taxes

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