Importing products from China can be a great way to start a new business, but it’s important to avoid any blind spots that could negatively impact your profits. One of the most critical blind spots is understanding your duty, tax, or tariff rates. Knowing how to calculate import duty from China to the US can help you avoid unexpected costs and make informed decisions about your business.
In this article, you will learn step-by-step how to find the HTS code and calculate import duty from China to the US. You will gain a valuable skill that will allow you to determine your tax and tariff rates on your own, giving you greater control over your business finances. We will cover topics such as why it’s important to know your duty rate, how to find the HTS code, and how to calculate import duty from China to the US.
Key Takeaways
- Understanding your duty, tax, or tariff rates is crucial when importing products from China to the US.
- Knowing how to find the HTS code and calculate import duty can help you avoid unexpected costs and make informed decisions about your business.
- This article will provide step-by-step guidance on how to find the HTS code and calculate import duty from China to the US.
Why Knowing Your Duty Rate is Important
There are two main reasons why it is crucial to know your duty rate when importing goods.
The first reason is that it can help you save money. By knowing the duty rate of a particular product, you can make informed decisions about which products to import. For instance, if two products look similar but have different duty rates, importing the product with a lower duty rate can help you save money.
To illustrate, let’s take the example of two umbrellas: a travel umbrella and a patio umbrella. While both products may look the same, the patio umbrella has a knob that allows you to adjust its height. If the travel umbrella has a duty-free rate while the patio umbrella has a 25% tariff, importing the travel umbrella would be the more financially sound decision.
The second reason why knowing your duty rate is important is that it is a legal requirement. As the importer of record, you are responsible for paying the correct amount of duty. If you import goods with an incorrect duty rate, you could face fines or other legal consequences.
It is important to note that even if a supplier declares a lower commercial invoice value to avoid paying duty, you are still responsible for paying the correct amount. If customs finds out and audits you, you could face penalties.
As an entrepreneur, it is crucial to avoid any blind spots that could negatively impact your business. Knowing your duty rate can help you make informed decisions and avoid legal issues.
In summary, understanding your duty rate is important for both financial and legal reasons. By being knowledgeable about duty rates, you can make informed decisions and avoid potential legal issues.
When for Free Import Duty from China to the US?
Duty-free exemption list
When importing goods from China to the US, Duty is free if the declared value is less than $800. However, if the commercial invoice value is over $800, Duty needs to be paid. To calculate the Duty rate, one needs to know the Harmonized Tariff Schedule (HTS) code.
In addition to the Duty-free exemption limit, there are also Duty-free exemption lists for different countries. For instance, the US has a Duty-free exemption limit of $800, while the United Kingdom has a Duty-free exemption limit of 15 GBP. Other countries like Australia, Canada, Europe, Japan, New Zealand, Russia, and Singapore have their own Duty-free exemption limits as well.
The following is a list of some Duty-free exemption limits for various countries:
- Australia: 1000 AUD
- Canada: 20 CAD
- Europe: 22 EUR
- Japan: 130 USD
- New Zealand: 308 USD (incl. freight)
- Russia: 10000 RUB
- Singapore: 307 USD
- South America: 50 USD
- United Kingdom: 15 GBP
- United States: 800 USD
It is important to note that the Duty-free exemption list is subject to change and should be verified before importing goods.
2 Additional Import Duty from China to the US.
1. Merchandise Processing Fee
For both air and ocean shipments, there is a merchandise processing fee of 0.34%, with a minimum charge of $26. If the total commercial invoice value multiplied by the percentage is less than $26, the minimum charge will still apply. However, the fee will not exceed $508.
2. Harbor Maintenance Fee
This fee only applies to ocean shipments. It is relatively small and is added to the regular duty rate, merchandise processing fee, and additional tariffs to calculate the total duty that needs to be paid.
To determine the duty rate for shipments over $800, the HTS code must be identified. Since these two fees are relatively low, finding the HTS code is crucial in determining the final duty rate.
In summary, importers must consider the merchandise processing fee and harbor maintenance fee in addition to the regular duty rate and additional tariffs when importing goods from China to the US. Identifying the HTS code is essential in determining the final duty rate for shipments over $800.
The Difference Between the HTS or HS?
When it comes to international trade, the terms HS and HTS are often used interchangeably, leaving many confused about the difference between the two. However, understanding the distinction between these codes is crucial for importers and exporters alike.
Example for HTS code means:
The HTS code, or Harmonized Tariff Schedule code, is a 10-digit code used to classify goods for import and export in the United States. The first six digits of the HTS code are identical to the HS code, which stands for Harmonized System code. The HS code is a six-digit code that is used by 200 countries and 98% of world trade, and is recognized by the World Customs Organization.
The last four digits of the HTS code are country-specific, which means that they vary depending on the country of import or export. This is why the same product may have a different HTS code in different countries. For example, a hand-made leather bag may have the first six digits of the HTS code as 420221, which represents everything made of leather, with the last four digits being country-specific.
To break down the first six digits of the HTS code, the first two digits represent the chapter name, which in this case is leather goods. The second two digits represent the heading, which further classifies the product as a handbag made of leather. The third two digits represent the subheading, which specifies that the handbag has an outer surface made of leather. Therefore, the first six harmonized code for the hand-made leather bag is 420221.
For U.S. importers, it is important to know the specific HTS code for their products, as it determines the amount of duty and tax that will be charged for the import or export of goods. The HTS code is regulated by the U.S. International Trade Commission (ITC), which ensures that the code is in compliance with the international Harmonized System.
In summary, while the HS and HTS codes may seem similar, the HTS code is a more detailed classification system that is country-specific and used by the U.S. for import and export purposes. Understanding the difference between these codes is essential for navigating the complex world of international trade.
How to do an HTS Code Lookup?
When importing products to the United States, it is important to determine the correct Harmonized Tariff Schedule (HTS) code to ensure that the correct import duty rate is applied. Here are the steps on how to do an HTS code lookup:
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Find the chapter and heading (first 4 digits) of the HTS code. There are four ways to find the HTS code chapter and heading:
- Type in the product keyword on Google
- Ask the supplier
- Contact a freight forwarder
- Go straight to the database on the International Trade Commission (ITC) website.
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Since asking the supplier or freight forwarder takes time, a live search on Google can be done to get an idea of the first four digits. Once the first four digits are identified, head over to the ITC website and type in the product keyword to validate the findings.
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When searching for the HTS code on the ITC website, the keyword will be automatically highlighted in the description. This helps to identify which HTS code description matches the product.
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To find the correct HTS code, it is important to know the product’s material construction, performance, and function. By reading the HTS code description, the one that makes the most sense can be identified.
For example, if the product is a travel umbrella, the HTS code description should match the product’s use as a handhold umbrella chiefly used for protection against rain. The correct HTS code for a travel umbrella is 6603.20.30, and the duty rate is free.
On the other hand, if the product is a patio or garden umbrella, the correct HTS code is 6601.10.00 and the duty rate is 6.5%.
By following these steps, one can determine the correct HTS code for their product and know the import duty rate from China to the US.
How do I Determine if I Need to Import Tariffs from China to US?
Find the Tariff Percentage
When importing goods from China to the US, it is important to determine the tariff percentage that applies to your product. The tariff percentage is the additional tax that is imposed on goods imported from China to the US. To find out the tariff percentage, you need to check the Harmonized Tariff Schedule (HTS) code for your product.
If you see a “/_” sign after the Duty percentage, it means that there are additional tariffs attached to the HTS code for your product. There are four tariff lists, namely List 1, List 2, List 3, and List 4.
List 1, List 2, and List 3 have a tariff percentage of 25% and have been in effect since 2018. List 4a has a tariff percentage of 7.5% and has been in effect since February 14, 2020. List 4b has a tariff percentage of 15% and was suspended until further notice.
To determine if your product is subject to tariffs, you can use a shortcut link that quickly finds out if your products have any tariffs attached to them. All you have to do is copy and paste your HTS code into the website and hit search.
For example, if your product has an HTS code of 6601.10.00, you can paste it into the website and hit search. If the result shows “(List 4B) $300 Billion Tariff Action, which means it means no additional tariff right now,” it means that your product is not subject to any additional tariffs at the moment.
Once you know the tariff percentage for your product, you can calculate the amount of Duty you owe. This will help you determine the cost of importing your product from China to the US.
Finalized Import Duty from China to US Calculation
The calculation of import duty from China to the US is an important aspect that importers need to consider before importing any goods. The duty is applied to the commercial invoice value, which is calculated based on the quantity and unit price of the imported goods. It is the responsibility of the importer to ensure that the correct declared value is indicated on the commercial invoice.
The total duty rate includes two fees, which should not be ignored even though they are small. The customs fee is calculated based on a percentage of the customs value, which is based on the declared commercial value. The commercial value should be indicated on the commercial invoice, which is the customs clearance file issued by the supplier.
The duty rate varies based on the Harmonized Tariff Schedule (HTS) code of the imported goods. Importers can find the regular duty rate by looking up their HTS code. They can also find out if there are any additional tariffs attached to the HTS code by looking up the four lists.
Importers can use a simple excel sheet to calculate their duty based on their commercial invoice value. However, it is important to note that under-declaring the commercial invoice value can lead to fines and paying all the duty, even when audited.
It is worth noting that there are two more columns on the HTS code website that importers need to be familiar with. The first column is the special rate countries, which are countries that enjoy free trade with the United States. The second column represents two countries, Cuba and North Korea, which have highly duty levels against their product.
In summary, importers need to follow three simple steps to find out exactly how much import duty from China they need to pay. First, they need to find their regular duty rate by looking up their HTS code. Second, they need to find out if there are any additional tariffs attached to the HTS code by looking up the four lists. Finally, they can use the simple excel sheet to calculate their duty based on their commercial invoice value.
How and When Should You Pay the Duty Fees?
When importing goods from China, paying duty fees is an important step in the process. The method of shipment you choose will determine how and when you pay these fees. Here are the different scenarios for paying duty fees based on the shipment method:
1. Shipment via Postal Service (such as China Post/Hongkong Post/EMS)
If you choose to ship your goods via postal service, such as China Post, Hongkong Post, or EMS, you will need to pay the duty fees when your package arrives at the post office. You can pay the fees to the postman at your door or visit the local post office to pay any duties and processing fees owed.
2. If it is Shipped by Express Service (such as DHL/UPS/TNT/FedEx)
If you choose to use an express service, such as DHL, UPS, TNT, or FedEx, the courier will pay the tax bill on your behalf and then ask for delivery costs. You will pay the courier directly for these costs.
3. Transported by an Air or Sea Freight
If your goods are transported by air or sea freight, there are two different scenarios to consider:
3.1 No Arrangement to Transfer Goods to Your Door
If there is no arrangement to transfer the goods to your door, you will need to clear customs by yourself. In this case, you will directly pay taxes at the port or airport where the goods arrive. Alternatively, you can hire a broker to clear the goods for you. If you hire a broker, they will charge you for their services and any responsibilities they have to pay duty fees on your behalf.
3.2 Hiring a Freight Forwarder
If you arrange a freight forwarder, they will help you clear the goods and charge any taxes you owe. They will also handle the logistics of transporting the goods to your door. This option can be more expensive but can save you time and hassle in the long run.
Overall, it is important to understand the duty fees and payment process when importing goods from China. By choosing the right shipment method and understanding how and when to pay the fees, you can successfully navigate the import process.
Check Import Duty from China to other countries
If you are planning to import goods from China, it is important to check the import duty rates of the destination country. This section provides useful links and instructions on how to calculate the import tax rates for various countries.
Useful Duty Check Links
To calculate the landed cost of your goods, you can use this useful link that checks worldwide VAT, GST, and Sales Tax. In addition, you can check the import duty rates from China using the following government links:
- Australia
- Canada
- EU
- India
- Japan
- Malaysia
- New Zealand
- Norway
- Pakistan
- Sri Lanka
- South Korea
- Switzerland
- USA
While the government data is updated and authoritative, there are also 3rd party tools available for easy calculation.
How to calculate the U.S. import tax rate according to HTS CODE?
To calculate the U.S. import tax rate, you can use the official website of the U.S. tax rate query: https://hts.usitc.gov/. Simply input the HTS CODE and check the General category.
How to calculate Japan’s import tax rate according to HS CODE?
To calculate the import tax rate for Japan, you can use the official website: https://www.customs.go.jp/english/tariff/2019_4/index.htm. Follow these instructions:
- Select the corresponding code according to the chapter
- Check the corresponding tax rate in the WTO column, which is China’s
How to calculate Russia’s import tax rate based on HS CODE?
To calculate the import tax rate for Russia, you can use the official website: http://www.russian-customs.org/legislation/tariff/index.html. Follow these instructions:
- Search for Russia by chapter
- Download the WORD file, which contains the import tax rate
How to calculate Canada’s import tax rate according to HS CODE?
To calculate the import tax rate for Canada, you can use the official website: http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/. Follow these instructions:
- Choose the year
- Select Customs Tariff by chapter according to the chapter
- Choose HTML
- Check the tax rate
How to check the import duty from China to EU countries?
The import tariffs of EU countries are uniform, and you can check them using the official website for tariff inquiries: https://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en. Follow these instructions:
- Confirm the accuracy of the HS code
- Re-query the tax rate corresponding to the code
- The third country is the tax rate suitable for China.
How to check the import Duty from China to the FTA countries?
Many countries have signed free trade agreements with China, and there are tariff preferences. You can check the import duty rates for these countries using the following search website: http://fta.mofcom.gov.cn/ftanew/taxSearch.shtml. Follow these instructions:
- Choose a country and click to search
- View the results
How to check the import tariffs of other 88 countries?
The Ministry of Commerce China has a universal query website that can help you find import and export taxes and fees, export commodity reports, regulatory conditions, and tax calculations for 88 countries/regions. You can access the website here: http://wmsw.mofcom.gov.cn/wmsw/.
With these resources, you can easily calculate the import duty rates from China to various countries. It is important to note that you can always ask your freight forwarder or custom booker for assistance. However, having this skill at your fingertips can make product research and import planning much easier.