Any cargo with commercial value in excess of $2,500 entering the U.S. is subject to duties and taxes. But there’s a lot of confusion and lack of clarity in the shipping industry regarding how much a shipper may end up owing on their cargo. Depending on the type of cargo being imported, the origin of the cargo, value, and several other factors, duty rates can vary greatly. The subtlest differences in materials or country of origin can make the duty rate on cargo drastically different. So how do you get an accurate estimate of what you’ll owe in duties?
In a sense, getting your duty rate for your international cargo is rather simple. So long as you know the exact HTS Code, you should be ready to get started!
Finding Duty Rates Based on HTS Codes
To understand duty rates, you need to understand HTS Codes. HTS Codes are a massive list of 10 digit codes which are created and assigned to essentially every single product and/or product category in existence. It helps Customs to understand what exactly is being imported, from where, and at what cost, giving them more clarity surrounding what duty rates should be for particular types of products to control imports vs. domestic production of certain products.
Anyways, the thing with HTS Codes is that they are incredibly finnicky. Unroasted decaf coffee will be a different HTS Code than unroasted regular coffee, which will be different than roasted decaf, which is different than roasted and ground decaf coffee, which is… you get the point.
Here’s how to get started in finding what your duty rate will be:
How to Find a Rate Online
Go to https://hts.usitc.gov/ and search your product’s HTS Code. It should give you a quick glimpse into what your duty rate will be for an import of your particular product!
You’ll also notice that for each product it will show you a general duty rate (which “generally” applies to the importation of that product from most countries,) as well as a “special” column, which will often indicate specific exceptions in duty rates depending on where they are being imported from. Sometimes, a duty rate may be higher on a product coming from one country, while other times, certain products may be duty free when being imported from a specific approved list of countries.
Potential Issues with Estimating Duty Rates
For just about every single product you can think of, there is an associated HTS Code. And the problem with attempting to gauge what your import duties will be is that shippers often overlook details that actually change what the appropriate HTS Code is for their product. Did you know Chinese-made shoes with shoelaces made in China vs. Vietnam have different HTS Codes and drastically different duty rates? Subtle details make a big difference.
Also, how do you deal with Value Added Services – i.e., a product that is “Made In China” is sent to Germany for modification or finishing before being imported to the U.S. How do you deal with that if either of those countries have listed exceptions in the “special” column? To add to the stress, a failure to list the correct HTS Code could be listed as an AMS Customs violation, which can cost you upwards of $10,000 per violation. Ouch.
These are often the problem that shippers run into when attempting to assess what their HTS codes will be and what the specific rates will be for their product and country of origin.
The solution? Talk with a real freight forwarder and a real person – don’t just try to figure it out yourself. Figuring out duty rates is simple if you know exactly what you’re doing, but there are so many potentials for mistakes along the way. To clear any potential confusion, simply reach out to one of our team members with your questions!
A 5-minute phone call could clear up all confusion surrounding duty rates and what your company will end up owing on your shipment, and save you from steep Customs fines for putting the wrong HTS Codes on your documentation!