What you must know about Taxes duties Estimation, Custom Clearance Process and Fee, the Trade War impact to successfully plan and import from China to the US.
Import From China To The US: Taxes Duty Estimation, Custom Clearance Process and Fee, The Trade War Impact, Everything Explained!
Why are we publishing this information?
Impact of U.S.-China Import Tariffs
Rising import tariffs on Chinese goods during the trade war have created uncertainty for importers and exporters, raising concerns about business stability.
Many importers struggle to measure the impact of these changes or navigate U.S. customs clearance, leading to fines and delays. Working with a licensed customs broker simplifies the process and helps avoid costly mistakes.
This article outlines practical steps to calculate import duties and clear customs efficiently when bringing goods from China into the U.S.
The additional 25% tariff
The increase in tariff on Import From China To The Us Known as the Section 301 tariffs (Section 301 Tariffs: A Comprehensive Guide), had many objectives including promoting domestic production, reduce the trade deficit between the two nations, surge the Chinese government to respect U.S. companies’ intellectual properties.
Impact of Tariff Increases on Imports from China
Rising tariffs have left many businesses questioning the new custom duty rate. Companies wonder how much they must pay moving forward and whether their products fall under the 25% tariff increase. Some now consider switching suppliers or buying locally if importing from China is no longer viable.
How These Measures Affect Businesses
Do the latest import regulations apply to your business—whether it’s a small startup, mid-sized company, or large exporter? How will the new tariff structure change customs clearance procedures?
Let’s break it down!
1. Do you need to pay the new import duties on all goods?
During the trade war with China, the U.S. has released 4 lists of goods that would be subject to higher tariffs. The lists include almost every item that can be imported from China. However, the U.S. has also published several lists of goods that were excluded from those tariffs after some consideration. You can check the items exempted from imports duties here: section 301 tariff exclusions.
If you have already imported some goods that are on the list of exclusions, you can file a claim to get refunded for the taxes you have already paid on the import.
Generally speaking, as long as the value of your good is less than $800, your goods are exempt from import duties, however, you will have to pay import duties on any goods you import into the United State for a total value of more than $800.
Items you can import from China that are exempt from tariffs include:
- Chest coolers
- Upright freezers
- Plastic drinking straws
- N95 respirators and face masks
- Anesthesia masks
Many exporters are also seeking to import ventilators, import personal protective equipment, import surgical gloves, and intensive care beds, importing isopropyl alcohol, and more.
2. How do the rates of customs duties apply to your products?
Understanding Customs Duties & Fees
Customs duty rates depend on two main factors: the H.S. code of the product and its country of origin. Based on these parameters, duties may be specific or calculated ad valorem (based on the total product value).
Additional Fees to Consider
Be aware of these extra charges:
- Federal Excise Tax (applies to items like alcohol and tobacco)
- Merchandising Processing Fee (MPF)
- Harbor Maintenance Fee (HMF)
Important Notes on Fees
- Air shipments do not require HMF, but MPF applies to all imports by air and sea.
- MPF fees range from $26.22 (minimum) to $508.70 (maximum).
This version makes the information more direct and active while keeping it informative. Let me know if you’d like further refinements!
3. What amount do you have to pay for customs duty?
As the result of the trade war between China and the US, all products falling under the HTS codes HTS 9903.88.01 or 9903.88.02 (machinery used to make or process textiles, food, technological parts, electronics…), and the HTS code HTS 9903.88.03 or 9903.88.04 (textiles, tools, food, consumer products, chemicals, construction materials, and agricultural products, commercial electronic equipment and automotive parts) are all subjected to an additional 25% tariff on imported Chinese goods. Please check here to have the complete list of products.
Besides the above-mentioned products, there are still some that are being evaluated to be included in the list of products subjected to the additional 25% tariff on imported Chinese goods you can have access to the list from here.
4. How is the import duty calculated?
4.1. The first thing to do here is to know the HS code of the products you are importing into the US. We can suggest three ways to do so.
- use the HS Code Lookup & Finder tool to check what is the HS code of your goods:
The H.S code lookup tool helps you to do an online check of the HS code of your products by typing in each product keyword. For instance: Glass. Then you can select the category related to your product. Once done, you will get the first 6 digits H.S code of the product.
- Use USITC:
Here you only need to enter the product keyword. Footwear for instance, is directly in the search bar of the USITC website. A menu with different codes to choose from will be displayed, you then have to scroll down to the corresponding product to see both the H.S code and the relevant duty rate at the same time.
- Use a local customs broker or freight forwarder:
Whether or not the above two methods work for you, whenever possible, you should double confirm those results with your local customs broker or an international freight forwarder who has a history of transporting goods to the US. The Customs broker and freight forwarder are the ones who will help you to do the customs clearance so they might be aware of the latest changes made to the H.S codes and relevant duty rates.
HS means International Harmonized System and is administered by the World Customs Organization. All countries have the same first 6 digits HS code for one product category. Each country can choose to modify by adding another two or four digits without changing the first 6 digits. The U.S. import, HTS classification system, and export, Schedule B classification system, expand their scope to 10 digits. HTS specifies duty rate for virtually every item that exists, based on the item’s H.S code and country of origin.
For instance, H.S.Code 0102.21.0010 is meant for Male Purebred Breeding Animals under heading 0102 (Live bovine animals), under chapter 01 (Live Animals).
HTS stands for Harmonized Tariff Schedule which essentially determines the applicable tariff rate of all merchandise imported into the states.
4.2. Once you have the HS code of the product you want to import, now you need to check the import duty rate.
One of the best ways to get this information is through an online search on the website of the U.S International Trade Commission website (USITC) for HTS Revision by chapter.
You will need to type in the keywords of your product, then scroll down to the section that your product falls under and click on the chapter that relates to your product to see the rate as displayed below.
Another way is to directly type in the H.S code you got from the methods described above, for instance: 4417.00.4000 on the search page of USITC to see the rate as shown below.
You can also choose to contact a customs broker or CBP specialist for very specific duty information on a particular product by calling your local CBP port.
4.3. Calculate the import tax
To show you how you can calculi the custom duty, we will use the example of the footwear circled in red in the screenshot above. Let’s say you are importing that footwear and you will ship them by the ocean. The footwear total commercial value is $5,000, below is how you compute the total import tax you need to pay:
The total tax you need to pay includes the following three parts:
- Customs Duty: the formula is: customs value * customs duty rate
- MPF fee: the formula is: commercial value * 0.3464% (shall not be less than $26.22)
- HMF fee: the formula is: commercial value * 0.125%
On the commercial invoice, you can find the declared value of goods which will be used to determine the customs value. In this example, the declared value of goods is USD 5,000.
You need to determine the customs duty rate. For this, you need the H.S Code and you can get it from the supplier or you can check it following the steps described previously. For this example, the H.S code is 6402.99.0800. On the USITC website, you will find the rate is 37.5% as shown below.
Then the custom duty will be:
- customs value * customs duty rate = USD 1875 (5,000*37.5%)
The MPF fee will be:
- commercial value * 0.3464%= USD 17.32 (5000*0.3464%) which is less than USD 26.22 so we will adopt USD 26.22 (shall not be less than $26.22)
The HMF fee will be:
- commercial value * 0.125%= USD 6.25 (5,000*0.125%)
The total tax you need to pay will be the sum of the custom duty, MPF and HMF which is: USD 1,907.46
Another way to compute the import tax is to use an online tool: SimplyDuty This website will automatically calculate the rate for you as long as you know the H.S code of your product. However, this website does not take into account the MPF and HMF fees.
Please understand that the calculation method described above will give you a rough idea of how much you need to pay and this can be helpful when you do your budget even before you buy your goods. However, we advise you to double check with CBP to have the final rate you will need to pay.
4.4. Check if you have to pay another 25% duty rate as the result of the trade war.
- Before the trade war
Using our same example for footwear, you will notice as shown in the picture above that under the General column of USITC, the general duty rate is 37.5%. However, when you look closely, there is this “/” right after the rate (circled in green) and when you hover over it, there is mention showing see 9903.88.15.
- Under the Trade war
the heading 9903.88.01, products of China, explains the current rate being the duty rate provided in the applicable subheading (37.5%) plus 7.5%, which comes to 45%, the new tariff rate.
In the article description column, you may also notice that note 20(r) and note 20(s) are mentioned, to help you get a better understanding of the content, you can find a detailed explanation under Chapter Notes as shown below:
There might be some instance where the “/” doesn’t show in the general duty column the products are included in the tariff list. What you need to do here is to search your product under HTS 2019 Revision by chapter and double-check with your customs broker or CBP to get the most specific duty information.
5. Pay your import tax
5.1. Do you need a customs bond when importing from china?
The CBP requires anyone importing goods valued at more than $2,500 to use a customs bond or comply with oversight from another federal agency. These requirements apply to almost every type of import.
What Is a Customs Bond?
A customs bond serves as an insurance policy, guaranteeing the payment of duties and taxes to the U.S. government when importing goods. It ensures payments are made, even in unexpected situations.
Imports arriving by air and sea require a customs bond. Without the correct bond, importers risk delays and fines when bringing goods from China.
If you elect to work with a Licensed Customs Broker when importing from China, you will be able to use your broker’s bond to secure your transaction. This can save you time and money, and you can rely on the broker’s import reputation to get your goods through customs faster. At USA Customs Clearance, powered by AFC International, you can use the help of professional customs brokers to get things done right.
The two type of custms bond
Choosing the Right Customs Bond
When importing from China, you can choose between single-entry bonds and continuous bonds. The right bond depends on how frequently you import goods into the U.S.
Key Differences Between Bond Types
A continuous bond covers all shipments within a one-year period, while a single-entry bond applies to only one shipment.
Continuous Bonds
A continuous bond simplifies the import process. To obtain one, you must pay for at least $50,000 in coverage.
- More cost-effective if importing multiple shipments in a year.
- Includes Importer Security Filing (ISF) requirements, eliminating the need for extra bonds.
- Prices vary based on providers.
Single-Entry Bonds
Purchasing a single-entry bond can be more complex than getting a continuous bond.
- The bond value must cover the total cost of goods, plus taxes, duties, and fees.
- If another federal agency oversees the goods, the bond must be at least three times the value of the shipment.
- For example, importing $7,000 in FCC-regulated electronics requires a $21,000 bond.
- Costs vary depending on the surety company selected.
Additional Bond Coverage
Importers may need supplementary bond coverage to meet specific compliance requirements.
More to know
- Additionally, you are required to have supplementary bond coverage to meet ISF mandates if you are shipping your imports from China by sea.
If you are purchasing a bond on your own, you should keep in mind that you are buying an insurance policy for the taxes and duties on your imported goods, so costs will vary. However, you can secure a customs bond for just $245 on USA Customs Clearance, and that’s the first step towards getting your shipments covered.
5.2. Entry form (CBP Form7501)
Another very important document you will need during the import entry process is the entry form (CBP Form7501), which goes with the calculated import tax from China to the USA. You can find an example form below:
5.3. Working with a Licensed Customs Broker to import from China?
How a Licensed Customs Broker Can Help with Imports from China
A Licensed Customs Broker offers valuable assistance when importing from China. They ensure that goods cross borders efficiently and arrive at the port of entry on time. They also help importers follow customs regulations to avoid delays or penalties.
Key Services Provided by a Licensed Customs Broker
- Arrange customs clearance for imported goods.
- Prepare import documents and ensure timely release.
- Facilitate smooth entry of products into the country.
- Work directly with CBP to handle government duties, taxes, and fees.
- Determine necessary import permits and assist in obtaining them.
- Provide import guidance, including entry options, free-trade agreements, and duty deferment.
Why Use China Import Consulting Services?
Using China Import Consulting Services through USA Customs Clearance ensures compliance with CBP regulations. Experienced brokers review import details thoroughly and help importers navigate complex procedures smoothly.
6. How to avoid or reduce the import tax?
Import Tax Exemptions
Import tax can be a burden, but some situations allow you to avoid tax duties, including:
- Personal Exemption: If the total commercial value of your goods is $800 or less, you won’t pay import tax. However, products like alcohol, cigarettes, and tobacco have import limits.
- Samples: Businesses use samples to check product quality, not for resale. If a sample has a nominal value of $1 and the invoice states “Sample of No Commercial Value,” it qualifies for tax exemption.
- Dropshipping: In dropshipping, you place an order, and the supplier ships directly to the buyer’s address. Since you don’t handle physical imports, no import duty applies.
Get Help Importing From China
Importing from China can be a lucrative, exciting, and, at times, challenging endeavor. Allow Nexus Group EPC to help manage challenging times while you enjoy the lucrative ones.
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