How to Save Money on US Customs Tariff: A Complete Guide (65 characters)

If you are importing goods into the United States, you may have to pay a customs tariff, which is a tax on imported products. The amount of the tariff depends on the type, value, and origin of the goods, as well as the trade agreements between the US and other countries. In this article, we will explain what the US customs tariff is, how it is calculated, and how you can save money on it.

What is the US Customs Tariff?

The US customs tariff, also known as the Harmonized Tariff Schedule (HTS), is a list of thousands of product categories and their corresponding duty rates. The HTS is based on the international Harmonized System (HS) of product classification, which is used by most countries in the world. The HTS is updated every year by the US International Trade Commission (USITC) and published by the US Customs and Border Protection (CBP).

The purpose of the US customs tariff is to protect domestic industries from foreign competition, raise revenue for the government, and implement trade policies. The tariff also affects the prices of imported goods for consumers and businesses.

How is the US Customs Tariff Calculated?

The US customs tariff is calculated based on four factors:

The product classification: The HTS assigns a 10-digit code to each product category, which determines the applicable duty rate. The first six digits are the same as the HS code, while the last four digits are specific to the US. You can use the HTS online tool to find the correct code for your product.

The product value: The duty rate is usually applied to the transaction value of the product, which is the price paid or payable by the buyer to the seller. However, in some cases, the CBP may use a different valuation method, such as the deductive value or the computed value.

The product origin: The duty rate may vary depending on where the product was made or where it was shipped from. Some countries have preferential trade agreements with the US, such as the North American Free Trade Agreement (NAFTA) or the Generalized System of Preferences (GSP), which allow certain products to enter the US duty-free or at reduced rates. You can use the FTA Tariff Tool to check if your product qualifies for any trade benefits.

The product quantity: Some products are subject to a quota, which is a limit on how much of a certain product can enter the US at a lower duty rate or duty-free. Once the quota is filled, a higher duty rate applies. You can check the quota status of your product on the CBP website.

How to Save Money on US Customs Tariff?

There are several ways you can reduce or avoid paying the US customs tariff, such as:

Choosing a different product classification: Sometimes, there may be more than one possible HTS code for your product, depending on how you describe it or what it is made of. For example, a cotton shirt may have a different duty rate than a polyester shirt. You should choose the most accurate and favorable code for your product, as long as you can justify it with supporting documentation.

Choosing a different product value: You may be able to lower your product value by excluding certain costs that are not part of the transaction value, such as freight, insurance, commissions, royalties, or packing costs. However, you should be careful not to understate your product value, as this may result in penalties or audits by the CBP.

Choosing a different product origin: You may be able to claim a different country of origin for your product if it underwent substantial transformation in another country before entering the US. For example, if you imported raw materials from China and processed them into finished goods in Mexico, you may be able to claim Mexico as the country of origin and benefit from NAFTA. However, you should follow the rules of origin for each trade agreement and provide proof of origin certificates when required.

Choosing a different product quantity: You may be able to avoid or delay hitting a quota by splitting your shipment into smaller batches or timing your shipment according to the quota period. However, you should not try to circumvent a quota by misrepresenting your product or falsifying your documents.

US Customs Tariff: Trends and Implications for Global Trade

The US customs tariff is the schedule of rates and categories that apply to goods imported into the United States. The tariff is based on the international Harmonized System (HS), which is a common nomenclature for world trade. The tariff rates and categories are periodically revised by the US government, in accordance with domestic and international trade policies and agreements.

The Impact of Tariff Changes on Global Demand

One of the main effects of tariff changes is their impact on the global demand for goods and services. Tariffs affect the price and quantity of imports and exports, as well as the production and consumption decisions of domestic and foreign firms and consumers. Tariffs can also affect the competitiveness, profitability, and innovation of different industries and sectors.

Generally, an increase in tariffs reduces the demand for imports and increases the demand for domestic substitutes, while a decrease in tariffs has the opposite effect. However, the magnitude and direction of these effects depend on various factors, such as the elasticity of demand and supply, the availability and quality of substitutes, the degree of competition, and the exchange rate movements.

For example, in 2018, the US imposed additional tariffs on steel and aluminum imports from various countries, aiming to protect the domestic industry from unfair trade practices. However, this also increased the cost of production for downstream industries that use these metals as inputs, such as automotive, construction, and machinery. As a result, some of these industries faced lower demand from domestic and foreign customers, who switched to cheaper or higher-quality alternatives from other countries.

On the other hand, in 2020, the US signed the Phase One trade agreement with China, which reduced some of the tariffs that were imposed during the trade war between the two countries. This agreement also committed China to increase its purchases of US agricultural products, energy products, manufactured goods, and services. This boosted the demand for US exports in these sectors, as well as the income and employment of US farmers and workers.

The Future of US Customs Tariff and Global Trade

The future of US customs tariff and global trade is uncertain, as it depends on various political, economic, social, and environmental factors. Some of the challenges and opportunities that may affect the tariff policy and trade relations include:

The ongoing negotiations and implementation of regional and bilateral trade agreements, such as the United States-Mexico-Canada Agreement (USMCA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP).
The resolution or escalation of trade disputes and conflicts with major trading partners, such as China, the European Union, India, Brazil, and Australia.
The recovery or deterioration of the global economy after the COVID-19 pandemic, which has disrupted trade flows and supply chains across various sectors.
The adaptation or resistance to technological changes and innovations that create new opportunities or challenges for trade, such as e-commerce, digital services, artificial intelligence, biotechnology, and renewable energy.
The compliance or violation of international rules and norms that govern trade, such as those set by the World Trade Organization (WTO), the International Monetary Fund (IMF), and the United Nations (UN).
The alignment or divergence of national interests and values that shape trade policies, such as those related to human rights, labor standards, environmental protection, national security, and public health.

References:

http://www.cbp.gov/linkhandler/cgov/newsroom/publications/trade/iius.ctt/iius.pdf

https://www.wto.org/english/res_e/booksp_e/tariff_profiles19_e.pdf

https://hts.usitc.gov/
https://www.usitc.gov/harmonized_tariff_information
https://www.cbp.gov/travel/international-visitors/kbyg/customs-duty-info

https://help.cbp.gov/s/article/Article-810?language=en_US

https://hts.usitc.gov/

https://www.cbp.gov/trade/basic-import-export/tariffs

https://www.trade.gov/fta

https://www.cbp.gov/trade/quota