Tariffs and Import Fees
What is a tariff?
A tariff or duty (the words are used interchangeably) is a tax levied by governments on the value including freight and insurance of imported products. Different tariffs are applied on different products by different countries. National sales and local taxes, and in some instances customs fees, will often be charged in addition to the tariff. The tariff, along with the other assessments, is collected at the time of customs clearance in the foreign port. Tariffs and taxes increase the cost of your product to the foreign buyer and may affect your competitiveness in the market. So knowing what the final cost to your buyer is can help you price your product for that market. In addition, your buyer may ask you to quote an estimate of these costs before making the purchase. This estimate can be made via email, phone or in the pro forma invoice.
Some countries have very high duties and taxes; some have relatively low duties and taxes. If your product is primarily made in the U.S. of U.S. originating components it may qualify for duty-free entry into countries with which the U.S. has a free trade agreement (FTA). We currently have FTAs with more than 20 countries. Targeting FTA countries is a good market entry strategy because buyers pay less tariff for goods made in the U.S. compared with similar goods from countries without FTAs. Here are the steps for finding and calculating estimated tariffs and taxes. Keep in mind that what you get from this process is an estimate. Only the customs officers in the country where the goods clear can make the final determination.
Step 1: Determine your HS or Schedule B Number
The first step in determining duty and tax information is to identify the product classification number, i.e. Harmonized System or Schedule B number for your product(s). More importantly, your goods won’t ship without this number on key shipping documents.
The Census Bureau sponsors a free online tool called the Schedule B Search Engine and an instructional video to help you classify your products. We also have a recorded webinar on the topic, which goes into greater detail about using the search engine tool and a second tool for finding the tariffs and duties by the importing country.
Read more on http://www.export.gov/