US Import Duty Rates and Customs Tax Guide

Navigating the complexities of U.S. import duties and taxes is essential for businesses engaged in international trade. These charges significantly impact the cost of goods, supply chain decisions, and overall profitability. The U.S. imposes various types of duties—including customs tariffs, anti-dumping (AD) and countervailing duties (CVD), and special trade tariffs (Sections 201, 232, and 301)—depending on the product’s origin, value, and classification. Additionally, excise taxes and state-level sales taxes may apply to certain imports.

How duties affect businesses and consumers

Impact on Businesses

Duties increase landed costs, reducing profit margins.
Tariffs force companies to find new suppliers.
Proper HTS classification, AD/CVD checks, and customs paperwork.

Impact on Consumers

Import taxes are often passed to buyers.
Some products become unavailable due to trade restrictions.

How to Reduce Import Duties Legally

To minimize import costs and ensure compliance, businesses leverage trade agreements, regulatory provisions, and strategic planning. Here’s an overview of key mechanisms and requirements:

Free Trade Agreements (FTAs)

The USMCA (U.S.-Mexico-Canada Agreement) eliminates duties on qualifying goods traded between member countries. Similar benefits apply under other FTAs like KORUS (Korea), AUSFTA (Australia), and the U.S.-Singapore FTA, provided rules of origin are met.

Duty Drawback

Importers can reclaim 99% of paid duties if imported goods are later re-exported or destroyed under customs supervision, reducing overall supply chain costs.

First Sale Rule

By structuring transactions to declare the factory price (rather than distributor markup) as the customs value, importers can lower duty assessments—subject to proper documentation.

Tariff Engineering

Modifying product designs or components to qualify for lower-duty HTS codes can yield significant savings. For example, adjusting a garment’s fabric blend might shift it to a duty-free category.

Generalized System of Preferences (GSP)

This program grants duty-free access to imports from 119 developing countries (e.g., Thailand, Indonesia) for eligible products, supporting cost-efficient sourcing.

What is VAT?

Value Added Tax (VAT) is a consumption tax applied at each stage of the supply chain. As opposed to a sales tax (charged only at the final sale), VAT is collected incrementally by businesses and remitted to the government.

Key functions of VAT

Applied in 160+ countries.
Standard VAT rates vary (e.g., 20% in the UK, 19% in Germany, 5-13% in China).
Businesses act as tax collectors, charging VAT on sales and reclaiming VAT on purchases

How VAT applies to goods and services

VAT on domestic sales

Businesses charge VAT on taxable goods/services.
Input VAT (paid on purchases) can be deducted from Output VAT (collected on sales).

Example (UK – 20% VAT):

Manufacturer sells goods to retailer for £100 + £20 VAT.
Retailer sells to consumer for £150 + £30 VAT.
Retailer pays HMRC: £30 (output) – £20 (input) = £10 VAT due.

VAT on imports

VAT is charged when goods enter a country, based on:

Customs value (CIF: Cost + Insurance + Freight) + Import duties.

Importers must register for VAT (if above threshold) and file returns.

Example (EU – 21% VAT):

Goods value (CIF): €10,000
Import duty (5%): €500
VAT base: €10,500
VAT due (21%): €2,205

VAT on services

B2B (Business-to-Business): Usually taxed in the customer’s country (reverse charge).
B2C (Business-to-Consumer): Taxed where the supplier is based (with exceptions for digital services).

If you wondering how to manage VAT as an importer, here’s some recommendations:

Check VAT registration thresholds.
Use a fiscal representative.
Leverage VAT deferment.
Keep detailed records for audits (invoices, customs docs, VAT returns).
Automate VAT compliance with software.

Common VAT mistakes that you should avoid:

Misclassifying goods (wrong VAT rate).
Missing import VAT reclaim deadlines.
Failing to register when exceeding thresholds.
Ignoring reverse charge rules for B2B services.

Regulations for goods worth pound 135 or less

The U.S. has specific rules for low-value shipments to streamline customs clearance while ensuring compliance. Below you can see some key regulations, duty exemptions, and requirements for goods valued at £135 (~$800) or less.

Minimum cost threshold:

Goods valued at $800 or less per shipment (per person per day) can enter the U.S. duty-free and with minimal formalities.

Applies to both commercial and personal imports.

Covers most e-commerce, gifts, and small packages.

Exceptions:

Alcohol, tobacco, perfumes (subject to duties regardless of value).
Goods subject to anti-dumping/countervailing duties (AD/CVD) (e.g., some steel, aluminum products).
Restricted/prohibited items (e.g., counterfeit goods, hazardous materials).

Key Regulations for Low-Value shipments

Customs documentation

No formal entry required (CBP Form 3461 not needed).

Simplified data submission by using:

Electronic Advance Data (EAD) (required for postal/mail shipments).
Air/Sea Carriers (must submit manifest data to CBP before arrival).

Prohibited/Restricted items

Even if under $800, these cannot be imported freely:

Counterfeit goods (fake branded items).
Drugs and unapproved medications.
Weapons, endangered species products (ivory, coral).
Food/agricultural items.

Special cases and exemptions

Section 321 shipments (Type 86 Entry)

For e-commerce sellers shipping directly to U.S. consumers.

Requirements:

Single buyer, single day, less than $800 value.
Must provide detailed product descriptions (HTS codes recommended).
Faster clearance.

Gifts

Duty-free if less than $100 (if marked as “gift” on customs form).
Over $100 but under $800: Subject to duty but often waived.

State Taxes

Some states (e.g., CA, NY) may charge sales tax on low-value imports

What Happens if exceeding $800?

Formal entry required (CBP Form 3461).
Duties & taxes apply (based on HTS code).
Customs bond may be needed (for commercial shipments).

Importing Goods Over pound 135

When you importing goods into the U.S. valued above £135 (~$800), additional customs duties, taxes, and formal entry procedures apply. Below you can see more information about this.

Key customs requirements for imports over $800:

Formal entry process

Entry Filing Required: Must submit CBP Form 3461.

cbp_form_3461

Customs bond needed:

Single-Entry Bond (for one-time shipments).
Continuous Bond (for frequent importers, covers multiple shipments).
ISF Filing (Importer Security Filing): Mandatory for ocean shipments (submitted 24+ hours before loading).

The list of required documents:

Commercial Invoice (with detailed product description, value, and HTS code).
Bill of Lading (BOL) / Air Waybill.
Packing List.
Certificate of Origin (if claiming FTA benefits, e.g., USMCA).

Duties and Taxes applied to High-Value imports:

Customs Duties (Tariffs)

Taxes imposed on imported goods, calculated as a percentage of the product’s value or per unit (specific duty).

How Calculated: Based on Harmonized Tariff Schedule (HTS) code of the product.

HTS Code	Product Description	Duty Rate (Ad Valorem or Specific)	Example Calculation
0201.20.00	Fresh beef, boneless	4.4% ad valorem	$100,000 × 4.4% = $4,400 duty
8703.23.00	Passenger vehicles (e.g., 1.5L engine)	2.5% ad valorem	$30,000 car × 2.5% = $750 duty
6403.91.90	Footwear with rubber soles	10% ad valorem + $1.25 per pair	1,000 pairs @ $20 each: ($20,000 × 10%) + ($1.25 × 1,000) = $2,000 + $1,250 = $3,250 total duty
0901.21.00	Coffee, roasted, not decaffeinated	Free (0%)	No duty applied
2204.21.00	Wine (still, ≤14% alcohol)	$1.07 per liter	100 liters × $1.07 = $107 duty
8517.12.00	Smartphones	3.7% ad valorem	$50,000 shipment × 3.7% = $1,850 duty

https://hts.usitc.gov/

Anti-Dumping (AD) & Countervailing Duties (CVD)

Purpose: Penalize unfairly priced (dumped) or subsidized imports.

Anti-Dumping Duties (AD): Imposed when foreign companies sell goods in the importing country at prices below fair market value (dumping), causing injury to domestic producers.

Countervailing Duties (CVD): Applied to offset foreign government subsidies that give imported goods an unfair advantage.

Aspect	Anti-Dumping (AD)	Countervailing (CVD)
Trigger	Below-cost (“dumped”) pricing	Foreign government subsidies
Investigation	Examines export price vs. home market price	Proves financial aid from foreign government
WTO Compliance	Allowed under WTO rules (Article VI of GATT)	Permitted under WTO Agreement on Subsidies

Examples:

AD Duty: The U.S. imposed a 62% AD duty on Chinese aluminum foil (2018) for selling below cost.
CVD Duty: The EU applied CVDs up to 25% on Chinese electric vehicles (2024) due to state subsidies.

Section 201, 232, & 301 Tariffs

Section 201 (Safeguard): Allows the U.S. to impose temporary tariffs or quotas on imports that cause or threaten serious injury to domestic industries, even if trade is fair. Example: In 2018, the U.S. applied 20-50% tariffs on imported washing machines and solar panels under Section 201 to protect domestic manufacturers from a surge in cheap imports.

Section 232 (National Security): Permits tariffs or restrictions on imports deemed a threat to national security, such as steel and aluminum. Example: In 2018, the U.S. imposed 25% tariffs on steel and 10% on aluminum under Section 232, citing reliance on foreign metals as a security risk.

Section 301 (Unfair Trade Practices): Authorizes retaliatory tariffs against foreign countries engaging in discriminatory or unfair trade practices, such as intellectual property theft or forced technology transfers. Example: The U.S. applied up to 25% tariffs on $370B of Chinese goods starting in 2018 under Section 301 due to China’s IP violations and trade distortions.

Excise Taxes (Select Products)

Applied to specific goods like tobacco, alcohol, tires, gasoline.

Product	Excise Tax Rate
Cigarettes	$1.01 per pack (federal) + state taxes (e.g., $4.35 in NY)
Beer	$0.58 per gallon (~$0.05 per 12-oz can)
Gasoline	$0.184 per gallon (federal) + state taxes (e.g., $0.58 in CA)
Tires	Up to $0.94 per tire (depending on weight)

European Union (Varies by Country)

Wine: €0–€3 per liter (e.g., Germany taxes sparkling wine; Italy exempts still wine).
Diesel Fuel: ~€0.45–€0.70 per liter (higher than gasoline in most EU states).

Sales Tax (State-Level)

Sales tax is a consumption tax imposed by state (and sometimes local) governments on the sale of goods and services, including certain imported products. Unlike tariffs or excise taxes, which are typically federal, sales tax is administered at the state level, leading to varying rates and regulations across the U.S.

State Examples (2024 Rates)

State	State Sales Tax	Local Add-Ons	Total Max Rate	Applies to Imports?
California	7.25%	Up to 2.5%	10.25%	✅ Yes (if sold in-state)
New York	4%	Up to 4.875%	8.875%	✅ Yes
Texas	6.25%	Up to 2%	8.25%	✅ Yes
Oregon	0%	None	0%	❌ No state sales tax

Duty Calculation Formula

Duty Amount = (CIF Value) × (Duty Rate) + Additional Taxes (e.g., VAT, Excise)

Example:

Product: Bicycle (HTS 8712.00, duty rate = 11%).

CIF Value: $1,500

Duty Due: $1,500 × 11% = $165

Total Landed Cost: $1,500 + $165 = $1,665

Relevance of customs duty in international trade

Reduce future charges

Use Free Trade Agreements (FTAs) – Claim duty exemptions (e.g., USMCA for U.S./Mexico/Canada trade).

Ship in Smaller Batches – Stay under the de minimis threshold (e.g., $800 in the U.S.).

How to Return Imported Goods (Avoiding Double Fees)

Check the Seller’s Return Policy – Some cover return shipping/customs.

Confirm Refund Eligibility – Customs duties/VAT may not be refunded automatically.

Process for returning goods

Step	Action
Notify Seller	Get a Return Authorization Number (if required).
Declare as “Returned Goods”	Mark the package “Goods Returned – Duty Refund Claim” to avoid new fees.
Submit Proof of Export	Provide the return tracking number to the original courier/customs.
Apply for Duty Refund	File with customs (e.g., CBP Form 4315 in the U.S.).