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Understanding China custom duties and tariffs


Custom Duties and Tariffs when importing from China



Custom Duties and Tariffs has always been a challenging issue when it comes to importing from China. Here is a video interview with Mr. Peter Zapf, from Global Sources, sharing with us some of his insights on these matters.


Transcript of the video:

So we’ve talked about many different concepts and levels of details and there are different complications as you say when you drill down into some of the different aspects of importing. One of those complications might be duties and terrors and what not. How do you suggest that people are importing, handle duties?

Sure, so the duty rates vary from country to country so I will focus specifically on folks importing into the U.S. For importing into the U.S, there’s a harmonized tariff code, I will give you the URL, and it’s basically a book that is put together by the government and it includes all of the duty rates of all of the different products, categorized by product type and typically what somebody needs to do is to go through the book, which is huge, but its downloadable as a pdf file, so you do a keyword search through it. Go through it, identify the product category that your product is in, and see what tariff code it is and whether or not there is any tariff for duty.

Now, very broadly, very generally, about 2/3 of the products that you import into the U.S have no tariffs for duties. So the majority of the products have no tariffs for duties. About another third of the products do have some level of tariff for duty that customs will come and collect as a result of the products being imported. But this is an area that somebody should research, prior to purchasing the product, cause it definitely affects your landed cost. Your landed cost, the full price that you are paying for the product to get to your door steps is, amount you are paying to your supplier, how much you are paying for shipping, if you are using a third party inspection service, what you are paying for that and definitely duties. There are duties that can add a material amount to the landed cost.

Now, I wanna tell you a funny story though. You can look in the books and see, hey, the duty rate that I’m supposed to be at is 8% or 12% or whatever. The problem is, its customs that makes the final determination of which category your product is in. And a lot of these new and innovative products, there’s no category for it yet. So, not a new and innovative product, but one of my friends was doing a horns for the old Willy jeeps. He was doing one of those little horn buttons. He shipped a thousand of them into the U.S, labeled the shipment as “horn buttons”, and when they cleared customs, customs treated them as “buttons”. Like a shirt button. And a shirt button has a duty rate on it. But a horn button, doesn’t have a duty rate on it. So in that case, he was able to go back to them and clarify, look, you guys have miscategorized this, it really belongs to this other category that doesn’t have a duty rate.

But ultimately its customs that makes the final determination on which category a product fits into. Now in terms of learning which category your product fits into, you can look into the documentation. You can also often talk to the suppliers. Cause if they’ve exported into the U.S before, they will know the appropriate harmonized tariff code and you can go look that up and see, oh okay, for this harmonized tariff code, this is what the duty rate is.

Great, thank you so much.

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