Import duty is an unavoidable cost in importing from China or in general international trade. And understanding import duty becomes so important especially when the trade tensions get high.

The import duty rates vary from country to country, and product to product. However, don’t be overwhelmed as it’s not a complicated topic as you imagine. This article will explain to you the basics of import duty.

Import Duty Complete Guide
Import Duty Basics

1. What is Import Duty?

You may also have heard a lot of terms like import tax, customs duty (including import duty and export duty), import tariff, etc. Right, they are just the same as import duty. Literally, import duty is a type of tax imposed on the imported products and charged by a country’s customs authorities.

To charge import duty, the local government can obviously raise its income. It can also make the locally manufactured products have an advantage over the imported ones. And by imposing high duties on its products can also be levied to penalize a certain country.

For example, imposing higher import duties became the most important means in the US-China trade war. So far, the US has slapped tariffs on US$550 billion worth of Chinese products. China, in turn, has set tariffs on US$185 billion worth of US goods.

2. How Does It Calculate?

As mentioned above, import duty varies from country to country, and product to product. But generally, import duty is a percentage charged on the customs value.

Import Duty = Customs Value * Duty Rate

Now you know the calculation formula of import duty, there are three main factors that will affect the duty amount

  • Applicable customs duty rates

Every country has its own customs duty rate for each type of merchandise, which is sorted and organized into different product codes.

  • Customs Value

It’s the value of the imported goods. And it’s to access the amount of import duty and other taxes. Generally, it’s the transaction value between the buyer and the seller. The customs value will be stated on the commercial invoice for the importer to make customs clearance. It will also be shown on the Bill of Lading which is more like a receipt issued by the carrier. However, the customs value may need to be accessed again by the customs officer.

The customs value calculation is different in different countries as well. Most countries access the customs value on the basis of CIF value. The US, Canada & Australia are the few countries where tariffs are applied on the basis of FOB value. You can read more about country-specific tariff and tax information.

  • Country of Origin

Depending on the country of origin of the merchandise, import restrictions and duties can vary greatly. It’s important to check whether there are special trade agreements between the countries of origin and destination that can affect duty rates.

3. How and Where Do We Check Import Duty Rate?

In many cases, importers are consulting the Chinese supplier about the import duty and taxes, etc. You should know that the Chinese suppliers will not be more knowledgeable than you on the import duty of your country. Not only the supplier, sometimes the shipping forwarder cannot be certain about the import duty rate. So, let’s learn to check the import duty rate in this section on our own.

3.1 Find the Right HS Code

The import duty rate is sorted and organized according to the product code. So, the first step is to find the product code (HS Code). The HS Code is also known as HTS (Harmonized Tariff Schedule) Codes in the US, TARIC Codes in the EU, NCM Code in Brazil, tariff codes, customs codes, harmonized codes, export codes, import codes, etc.

A full HS Code has 8 to10 digits of numbers. And HS Codes vary from one country to another. There is no global HS Code, but the first 6-digit of one product is the same internationally. Each country can modify by adding another two or four digits without changing the first 6 digits. To get the right HS Code, you need to know the material, function, and pictures, etc. If you only have the product name, here are 3 ways to get an HS Code.

3.1.1 Use HS Code Search Engine

FindHS.Code is a great tool to find the international 6-digit HS code with the product name in a few seconds. And It even showed the product code with product images that offer you a piece of clear information. But it only has a free trial with 30 queries.

3.1.2 By Specific Platform

For all the platforms, you may only need to input the product name to get the HS Code. Most of the time, there will be hundreds of results. To get the right HS Code, you also need to find the product of the same article description with yours.

In the US, you can find your HS Code at Harmonized Tariff Schedule.

In Canada, you can find your HS Code at Canadapost. On this platform, it guides you to input the information step by step. It even allows you to choose the destination country and the country of origin.

Find an HS Code in Canada
Find an HS Code in Canada

In the EU, you can find your HS Code at Tariffnumber.

Find HS Code in European Customs Portal

3.1.3 Consult Your Customs Broker or Freight Forwarder

It’s great if you know a piece of information about import duty. But you don’t need to do the work by yourself especially if you have a customs broker or freight forwarder. When importing from Yiwu wholesale market for a mixed container, hundreds of items will be involved. There is no way that you can manage it. At this point, the brokers have profound experience in the business and know exactly what to do. You probably get extra advise after consulting from them.

3.2 Check the Import Duty

After we get the international HS Code or the specific one, it’s time for us to check the import duty. If you know a bit of Chinese, you should use the public business information services of the Chinese Ministry of Commerce. It provides import and export taxes and fees in 88 countries/regions, regulatory requirements in 48 countries/regions, and calculation of taxes and fees in 55 countries/regions. You can also use google translate to have a better understanding of the interface.

Public Business Information Services of the Chinese Ministry of Commerce
public business information services of the Chinese Ministry of Commerce

In the United States, you can check from the U.S. International Trade Commission website

Go to the above website, enter the product name or the first 6-digit HS Code in the search box under HTS Search, and at the left border of the search results page has a detailed HTS Code. You need to select the HTS Code according to your specific product.

For specific products, you can see that there are several columns at “Rates of Duty”. Which column should you look at?

“General” in “1” refers to the tariffs of most imported products from the world (including China), and “Special” refers to the import tariffs of countries that have relevant free trade agreements with the United States.

“2” refers to import tariffs on special trade-restricted countries (such as North Korea) that do not have trade relations with the United States. So, you need to look at the “General” tax rate.

In the European Union, you can check from the European Union Tariff Database (TARIC).

European TARIC Consultation
European TARIC Consultation

The most important part of the EU trade policy is the customs union. Products imported from a third country are subject to the same import duties regardless of the country in which they enter the European Union.

The 28 countries of the European Union, in addition to the Brexit UK, there are 27 other countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Romania, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden.

In Russia, you can check from the official website of Russia’s import tariffs

You can also search the code on the left column and download the tax rate file for the specific tax rules on the right.

For free trade agreement countries

There are some countries that have signed free trade agreements with China. You can check the tariffs from the China Free Trade Zone Service Network.

The following countries have signed trade agreements: Indonesia, Malaysia, Vietnam, the Philippines, India, Bangladesh, South Korea, Mauritius, Georgia, Iceland, Peru, Singapore, Pakistan, Chile, Maldives, Australia, Maldives, Switzerland, Costa Rica, New Zealand, etc.

4. What Is De Minimis Value?

De minimis value, in other words, the import goods value is too small to charge the import duty. It is also known as Duty Free Amount. If the value of your imported goods is less than the duty free amount, then the duty will not apply. Different countries have different standards on this amount. Here are examples in some countries. The information may not be perfectly accurate or updated. Note: If the value of the goods is within the duty free amount, you may still need to pay a certain tax. For more details, you can check from the overview of de minimis value regimes open to express shipments worldwide.

  • Australia: 1000 AUD
  • Canada: 20 CAD
  • European Union: 150EUR
  • Japan: 130 USD
  • New Zealand: 295 USD
  • Russia: 10000 RUB
  • Singapore: 307 USD
  • United Kingdom: 150 EUR
  • United States: 800 USD

5. Can Import Duty be Avoided or Reduced?

Import duty can be avoided only if you are importing a small value which is less than the duty free amount. When you are buying samples or drop shipping small value items from China, there is no import duty. However, the import duty can be reduced in a few ways.

5.1 Separating Shipment

If you are not in need of a huge inventory, you can separate the shipping in a couple of times. Especially if you are importing to the US, the De Minimis Value is US$ 800. It’s a very good value to get started. But this is not practical when you are importing in bulk. Separating the shipment will only bring higher shipping costs.

5.2 Trans Import

There is a huge pressure when 25% duty imposed on a value of US$ 550 billion goods importing from China. Trans import is a solution to reduce the import duty. For example, transshipping from Singapore, Panama, etc. But it requires a comprehensive supply chain and more risks will be involved.

5.3 Reducing Customs Value

There are customers trying to reduce the import duty by making undervalue commercial invoice. This is not recommended as it is a crime. The customs officer will access the value of the goods according to the database. It may cause serious impacts on your business once it’s detected. You do have the rights to declare the value of the goods as you want. But the sellers or the export agent will not be responsible for this after issuing the devalued invoice.

Final Words

You need to know that import duty is a small part of all the costs when importing from China. It’s hard to calculate the exact import duty before importing. Hope this article will help you know more about import duty and gain confidence in starting to import. Before you make any actions, you may also need to know what the landed cost is, how it is calculated, etc. Stay with us, we are working to bring you a complete guide to it.