Understanding the different types of customs import duties when importing into the US

Understanding the different types of customs import duties when importing into the US

Customs duties are an indispensable part when it comes to importing goods into the United States. Without clearing the customs duties, your goods may not be allowed to enter the country. Customs import duties are often viewed as a complex subject. In this article, we are going to explore the different customs import duties that incur when you importing goods into the US.

What are customs import duties

Customs import duties in the US are tariffs put in place by the United States government which is levied upon goods that are imported into the US.

Why do custom import duties exist?

The business of importing goods from outside countries is a lucrative one. For example, you can import goods from other countries into the United States, which are harder to manufacture domestically. Then the business owner can sell the imported goods at a great price within the country.

However, there is a chance that importing goods at a very low price can hurt the domestic producers within the country. In such cases, the government imposes tariffs on import goods.

These taxes normalizes the prices which prevent the importer from excessively importing goods, which may hurt domestic production. Apple is a great example for businesses depending on outside countries for labor and raw materials and then importing the finished goods back in the US. Apple mostly depends on China for iPhone assembly and sources its components from a variety of companies around the world. If the iPhone was manufactured domestically in the US, prices would soar making these devices even more hard.

Can you import products into the US without paying duties?

The CBP or Customs and Border Protection in the United States have specifically mentioned that shipments imported into the US will not be labeled legal until:

  1. The shipment enters within the port of entry
  2. The delivery of the shipment is authorized by the CBP.
  3. All the customs duties on the shipment have been paid.

So it imperative that importers pay the customs duties on their shipment before it is used in the United States.

Understanding the different types of Import duties

Import customs duties are can be categorized into three.

1.     Basic Customs Duty

As the name suggests, it the most basic amount of tax levied on a shipment. Basic tax can be calculated in two ways.

Ad Velorum (% of total value): In this case, the basic tax is calculated as a percentage of the total value of the shipment. Their percentage value can vary between 0% to 37.5%.

Specific Rates: In this case, the basic tax is calculated as dollar/cent per unit. The dollar per unit varies based on the product that you are importing.

Basic Customs Duty mainly depends on the type of goods being imported. So the importer must submit accurate data that proves the authenticity of the shipment. HIS or Harmonized Tariff Schedule (HTS) is used to identify the product and calculate its basic tax.

2.     Countervailing Duty (CVD)

Countervailing duty is taxed to level out the price difference caused by subsidies offered to the producers in the country of origin by their government.

Subsidies allow international producers to manufacture their products at a lower rate. However, this could hurt the domestic producers if the importer were the sell the products at a very low price in the US. So countervailing duty offsets the price reduction to create an even pricing structure when the goods enter the USA.

Countervailing Duty is calculated based on the Agreement on Subsidies and Countervailing Measures put in place by the WTO (World Trade Organization). Countervailing Duty is charged in addition to basic duty.

3.     Anti-Dumping Duties

Anti Dumping duties are taxed on shipments if the country of origin tries to sell the product in the US at a lower price when compared to their domestic market price or other countries. In simpler terms, Anti-Dumping  duties kick in when the shipment is sold to the importer below the standard market rate.

Dumping happens when the suppliers in a country try to undercut the domestically produced goods in the country that they are shipping to. Excess stock is another reason for dumping where companies try to sell off all the goods in the inventory. Anti-Dumping laws vary based on the country of origin and type of shipments being imported.

Anti-Dumping laws protect the domestic producers as it levels out the unfair price advantage of similar products. In the US, Anti-Dumping tariffs are imposed by the International Trade Commission (ITC). Anti-Dumping taxes are charged in addition to basic import duties and countervailing import duties.

When should the importer pay the import duties?

As per the CBP, the importer must pay duties on a shipment when it first enters the country. The shipment must be accompanied by other documents detailing the nature of the product, country of origin, etc.

Why do people hire a Customhouse Broker?

Importers who are just starting may not know the specifies of how to import/export business works in accordance with domestic and international governments. This is very frustrating to an entrepreneur who wants to expand their business by collaborating with international companies. Experienced and mid-range importers depend on customhouse brokers because they will streamline the paperwork and legwork for the companies. This makes importing goods into the US a lot easier and approachable.

Should I hire a Customhouse Broker?

If you don’t want to busy yourself with customs paperwork and other formalities, then hiring a customhouse broker is the best choice. Customhouse brokers will be also highly experienced in the trade, which will give the importer valuable insight into how things work, helping them to make better decisions.

Always choose a reliable name in the industry

Pedraza Customhouse brokers have been in the trade for more than 15 years now. We have a strong track record when it comes to helping businesses import and export goods to and from the US. If you need a reliable company to manage the import/export formalities for you, then choose Pedraza Customhouse Brokers. Our service always ensures the best for the client and their business.

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Pedraza Content Team

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