Import Duty

To determine the correct duty rate, you need to: 1) Find the proper HTS code for your product in the Harmonized Tariff Schedule of the United States, 2) Determine the country of origin, 3) Check if any preferential rates apply based on free trade agreements, and 4) Verify if any special duties apply (antidumping, countervailing, or Section 301/232 tariffs). The U.S. International Trade Commission maintains the official HTS database online, but many importers use customs brokers to ensure accurate classification and duty assessment.

Yes, several legal strategies can help reduce import duties: 1) Source from countries with preferential trade agreements or GSP benefits, 2) Use duty drawback to recover duties paid on imported goods that are later exported, 3) Utilize Foreign Trade Zones for manufacturing, storage, or manipulation of goods prior to formal entry, 4) Take advantage of tariff engineering by designing products to meet lower-duty HTS classifications, and 5) File for duty exclusions when available for special tariffs. However, all strategies must be implemented properly and legally - misclassification or false claims of origin constitute customs fraud.

If CBP discovers that you've underpaid import duties, even unintentionally, they can issue a bill for the additional duties owed plus interest. For entries less than five years old, CBP can conduct post-entry audits and collect any underpaid duties. In cases of negligence or fraud, CBP may also impose significant penalties ranging from 2-4 times the duty amount for negligence and up to the domestic value of the merchandise for fraud. Willful violations can also lead to criminal prosecution. It's always best to voluntarily disclose and correct errors when discovered.

Yes, import duties can change with little notice. This creates significant risk for importers with long lead times. The most common scenarios for duty changes are: 1) Implementation of new Section 301 or 232 tariffs, 2) New antidumping or countervailing duty orders, 3) Expiration of trade preference programs, or 4) Changes in product classification rulings. To manage this risk, some importers use flexible supply chains, include tariff increase clauses in contracts, or obtain binding rulings from CBP to lock in classifications. However, even binding rulings don't protect against new special tariffs imposed for trade policy reasons.

While import duties, sales tax, and VAT are all forms of taxation, they differ in several key ways: 1) Import duties are charged only on imported goods, while sales tax/VAT applies to most goods sold domestically, 2) Import duties are typically charged to the importer at the border before goods enter commerce, while sales tax is collected from the end consumer at point of sale, 3) Import duty rates vary by product classification and country of origin, while sales tax/VAT rates generally apply uniformly to all taxable goods, and 4) Import duties often serve policy goals like protecting domestic industries, while sales tax/VAT primarily generates government revenue.