How to Import into the US

Import tax or import tariffs (also known as import duties) in the United States generally refer to the taxes and fees charged by US Customs when importers bring goods into the country. They are assessed by government employees with US Customs at the port of entry, and are paid by the importer of record.

All goods entering the United States are subject to the same import procedure and the same tariff (tax) assessment, although every product has its own duty rate and some have a duty rate of zero!

Import taxes are the second largest source of revenue for the United States behind the Internal Revenue Service.

In addition to being revenue source, import taxes are used to control domestic market conditions and as a political tool. US Customs and the US International Trade Commission will raise and lower import taxes on particular goods to give domestic producers an edge over foreign imports. To exert political pressure, certain countries may be assigned a higher duty rate on their exports or may be embargoed (locked out) to prevent trade.

The primary criteria for import tariffs and taxes are:

• Country of origin
• Commodity type
• Intended use

and are determined using the US Harmonized Tariff Schedule, a yearly publication listing duty rates for a wide variety of import commodities. The USHTS also includes procedures and guidelines for determining import tax rates.

A foreign trade zone is a warehouse on US soil that acts like limbo for imported goods. If you have something that can’t come into the country, is just stopping off before being shipped to another country, or needs to operate outside of standard Customs procedures, a Foreign Trade Zone (FTZ) might be the way to go.

Example: I worked with a customer one time importing textiles (T-shirts) from China for sale in the US. As many textile importers will tell you, there is an import quota on Chinese textiles that caps the total amount they’re allowed to import into the US each year. Unfortunately, this importer’s agent failed to advise his customer that his category’s quota for the year had been filled. The end result was 50,000 embroidered T-shirts held at the port of Long Beach California that could not be cleared through Customs.

As you can probably guess, the solution I recommended was a Foreign Trade Zone. By warehousing the goods in an FTZ on US soil, the importer was able to avoid shipping his goods back to China (and all the costs that would incur) and was first in line when quota was re-opened the following year.

Not a totally pleasant experience for the importer, but a lot better than the alternative!

Question

I am interested in importing single samples of furniture from Bulgaria as showroom pieces. Each piece is valued at 90-150 Euros and I would like to find out the approximate import tax. The pieces are not for resale.

Answer

Importing samples into the United States allows companies to receive example goods from overseas and choose from multiple vendors before committing to larger import quantities. It’s a common practice and an excellent method for determining quality, transit times, and estimating a budget.

When importing a sample shipment, keep the following in mind

Sample goods are classified under chapter 98 of the US Harmonized Tariff Schedule, a chapter designated for specialty import provisions. Most imported samples are classified under HTS number 9811.00.60. Samples classified in this way must not be valued over USD $1 or must be permanently marked, torn, perforated, or otherwise mutilated so that they are not suitable as a saleable item.

Example sample mutilations and markings

• Drilling a one inch hole into the bottom of a tennis shoe would make it unsuitable for sale and would allow it to be imported as a sample.
• Indelibly marking by carving or etching a surface of a piece of wooden furniture where it would be conspicuous and in plain sight with the words “Sample: Not for resale” would meet the marking requirements of classification 9811.00.60.
• Including a permanent tag, sewn in a conspicuous place, with the words “Sample: Not for resale” on cushions and upholstered furniture would meet the sample marking requirements.

Duty

Sample imports classified under HTS classification 9811.00.60 and meeting the above requirements for marking are free of duty from any country of import.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Question

A US company wants to outsource software development to India. Will the US company have to pay import duties on the software? If so, what is the tax or range?

Answer

Electronic transmission and data exchange have evolved at an alarming rate in the last ten years. Mulit-million dollar projects are outsourced and completed overseas with the final result often delivered simply by email or FTP. The US International Trade Commission addresses the import of data in a some what archaic manner by exempting electronic tele-communications under General Note 16(b) of the HTSUS. Data imported in a physical form (on CD or diskette), however, is dutiable under the classification of the physical media itself. It is important to realize that value of the data contained in physical media may directly influence the value of the media itself. An importer importing a $0.50 cent compact disc containing a $30,000 software bundle may be liable for paying import duties as a percentage of the $30,000.

Importers considering outsourced software projects should also note that imports and exports of cryptographic hardware and software are regulated by the Bureau of Industry and Security.

Please note: This article is intended for informational purposes only and is not specific legal advice. As

Question

My friend and I would like to purchase fashion jewelry and fashion accessories, such as: belts, earrings, bracelets, necklaces, watches, etc. from countries outside of the U.S. and then sell them on e-bay or our own website. We have a sellers permit in California. Do we need any other kind of license and/or permit if we purchase goods outside of the U.S. and sell them in the U.S.? Also, how do the taxes work on those items?

Answer

Most fashion accessories with the exception of those made from textiles (cloth or clothing items) will be free from any additional licensing or import requirements of other government agencies, so your main obstacle will be US Customs – filing the proper paperwork, paying import duties, etc. This is assuming you are importing items from a country that maintains normal trade relations with the United States. Importing will be very difficult if your product is manufactured in Cuba or North Korea because they do not enjoy normal trade with the US.

Sources

There are large export markets for fashion accessories in both China and India. I would recommend dealing with Chinese markets for non-textile related goods and India for textiles. China currently has some quota restrictions with regard to the import of textiles whereas India does not. It might be also be easier to find an English speaking vendor in India.

Import Taxes and Valuation

When you import any good into the United States, you are required to pay an import duty (also called an import tax). Some goods have a duty rate of free while others can climb to over 20% of the value declared. The average duty rate in the US is between 3-5% of the value. The value of an import is typically considered the current US market rate for that good. For example, if you are going to sell a silver bracelet for $20 in your online store, you would declare its value to US Customs as $20 and pay duty based on that.

Because you plan on importing multiple items, I recommend becoming familiar with the US Harmonized Tariff Schedule. Each item you import must be assigned a ten digit classification number which will determine its rate of duty and eligibility for special trade programs. I’ve included a few sample classifications for your reference below.

Other Notes

Watches

You mention wanting to import watches which can be challenging without the proper research. Instead of having one classification number per item type, watches (even if they are assembled) are imported with multiple classifications per piece (one for the band, the crystal, the movement mechanism, etc.) and declared separately.

Before you commit

Once your vendors are established and you are ready to import, take several precautions before you send payment overseas:

• Ask for samples of the item you intend to import to verify quality.
• Make sure you have considered transportation costs when negotiating your final price.
  • Who will be paying for the goods to leave the country?
  • Who pays for the air/ocean freight to get it to the United States?
  • Who pays for the transportation from the airport/oceanport to your place of business?
  • What about insurance?
• Take a moment to research incoterms and do not be shy about discussing it with your vendor.

Sample classifications:

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Question

I plan to import on a commercial basis late this year a newly developed consumer product that uses Light Emitting Diodes and gentle vibration to revitalize facial skin. This is a consumer product similar to hair dryers and the Sonicare toothbrush that draws less than 500 W and is rechargeable with an electric charger. What will be the duty on these products?

Answer

It can be especially difficult to assign a Harmonized Tariff Number to manufactured goods, especially those based on an emerging technology because the Harmonized Tariff Schedule may not specifically account for the item being imported. As this is a manufactured or refined product, it will be found in the later chapters of the Tariff (as opposed to imports like wheat, steel, etc. which are found in earlier chapters). The more refined a good, the further back it will be listed in the tariff. This prevents us from classifying your LED skin-care tool as simply an article of plastic or metal.

My first thought with this was to look in section XVIII, chapter 90 of the tariff which covers medical items. After looking at your description again, you’ve listed it as a consumer item and not a medical tool which makes this chapter unsuitable. Chapter 90 covers medical devices like dentist drills, medical diagnostic tools and other items you might find in a doctor’s or veterinarian’s office.

From there, the next logical choice is Section XVI, chapter 85 which encompasses

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

The unit contains a light-emitting diode (which is specifically accounted for in the tariff), but it also vibrates and functions as a hand-held appliance. Based on your description, I believe the essential character of the item is less an LED, and more an appliance or piece of electrical machinery. With this assumption, I would classify this item under:

8509.80.0095 – which provides for electromechanical domestic appliances, with self-contained electric motor, and parts thereof, other appliances, other.

Assuming your import is coming from a country that maintains normal trade relations with the United States (China, India, Great Britain, etc.) this item carries 4.2% duty rate and is eligible for several reduced rate of free trade programs.

Other things to consider are the possible import restrictions placed on consumer cosmetic devices by the FDA as well as the possible implications of shipping hazardous materials in the form of rechargeable batteries.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.