27 June 2023Guide
US Guide to Tariff Classification and Duty Minimization

What is a tariff code?

Tariff or commodity codes are product identification numbers used by Customs Border and Protection (CBP) to classify goods to help determine the correct import duties and additional taxes that are required.

Most countries adhere to the internationally agreed upon Harmonized System (HS) created by the World Customs Organization (WCO) to establish a uniform classification scheme for international trade.

There are thousands of tariff codes to describe specific goods, they’re generally six digits long, but can be up to ten, depending on the country you’re importing to.

What are duties and taxes?

Customs authorities collect tax when goods are imported into the country to protect local business, the economy, and environment: the most common in the US are Import Duty, Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF).

A Duty is the tax placed on all cross-border goods determined by a percentage of the value of the goods.

The MPF is calculated as a percentage (0.3464%) of the estimated or declared value of the goods you are importing, excluding duty, freight and insurance charges. The maximum MPF value is $528.33, meaning if your calculated fee is above this figure, you only pay the maximum amount.

The HMF is again, calculated as a percentage (0.125%) of the value of the goods but only applies to ocean freight at particular US ports, with the aim of helping maintain the ports and harbors.

There are additional taxes that can be added to your imports, and can vary depending on your trade agreement with the US, so it is important to be aware, and comply with relevant taxes involved with international trade. With this in mind, seeking support from customs specialist teams or brokers will make navigating this process easy and help with accurately classifying tariffs to ensure you are compliant with the relevant regulations.

Duty Minimization

Our dedicated customs consultants will review tariff codes used to look for the correct duty rate to ensure clients are compliant with the US laws, do not incur penalties nor overpay duties.

Tariff classification, duties, and taxes can be complex, so having the support of a customs specialist is crucial in helping to identify cost savings, duty suspension, preferential rates, licensing requirements and additional duty amongst others specific to the goods you are importing.

If you would like more information about tariff classification or duty minimization, please contact our customs team below:

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