What is the difference between duty rate and tariff?

The terms are often used interchangeably. Technically, a tariff is the tax itself (the law), while the duty is the amount of tax paid. In practice, 'duty rate' and 'tariff rate' mean the same thing — the percentage or specific amount applied to the customs value of the goods.

Who is responsible for paying import duty — the buyer or the seller?

It depends on the Incoterm agreed in the sales contract. Under EXW, FCA, FOB, CFR, CIF, and CPT, the buyer (importer) pays duty. Under DDP (Delivered Duty Paid), the seller is responsible. DDP is increasingly requested by e-commerce buyers but can create significant compliance complexity for sellers.

Can I find out the exact duty rate before I import?

Yes. In the EU you can apply for a Binding Tariff Information (BTI) ruling — a legally binding classification decision valid for 3 years. In the US you can request an advance ruling from CBP. These eliminate uncertainty but take several weeks to process.

What happens if I declare the wrong HS code?

Misdeclaration — even unintentional — can result in back-payment of duties plus interest, penalties, and in serious cases seizure of goods. Customs authorities share intelligence internationally and conduct post-import audits. Use a licensed customs broker or trade consultant to verify your classification.

Are samples and low-value shipments duty-free?

Many countries have a de minimis threshold below which no duty is charged. The EU's de minimis is €150 for customs duty (VAT still applies above €0). The US threshold is $800. Australia is AUD $1,000. The UK is £135. These thresholds are under increasing political scrutiny and may change.

What is first sale valuation and is it legal?

First sale valuation is a legitimate US Customs strategy where the importer declares customs value based on the manufacturer's price (first sale) rather than the middleman's price (last sale), reducing the dutiable value. It requires solid documentation showing the goods were destined for US export at the time of the first sale. It is not available in all countries.

How do anti-dumping duties work in practice?

Anti-dumping duties (ADD) are product- and country-specific and are listed by the precise HTS subheading. They are applied in addition to the normal MFN duty. Rates can be updated annually through administrative reviews. Even switching to a different Chinese factory doesn't automatically avoid ADD — your goods may still be assessed the China-wide rate unless your supplier has their own determined rate.

Can I reclaim import VAT?

Yes, if you are VAT-registered in the destination country, import VAT is typically fully recoverable on your VAT return as input tax. This makes import VAT cash-flow neutral for registered businesses but a permanent cost for non-registered importers (including most consumers purchasing from overseas).

Import Duties & Tariffs

What Will You Pay in Import Duty?

Select your origin, destination, and product category to see estimated duty rates, VAT/GST, and any special tariffs or FTA opportunities.

Origin country

Destination country

Product category (HS chapter)

Select origin, destination, and product category to see estimated rates.

Customs Valuation

How Customs Value Is Calculated

Customs authorities don't simply tax the price you paid — they use a defined methodology to determine the dutiable value of your goods.

The six valuation methods (WTO hierarchy)

CIF vs. FOB basis

Most countries (EU, UK, Australia, China, Japan) calculate duty on CIF value — the cost of goods plus insurance and freight to the destination port. The United States is a notable exception: US customs duties are levied on the FOB value (cost of goods + export packing, excluding international freight and insurance). This means the same shipment can have a meaningfully different dutiable value depending on the destination.

CIF countries

EU, UK, Australia, Canada, China, Japan, most of the world

FOB countries

United States

What gets added to transaction value

Commissions & brokerage

Buying commissions are excluded; selling commissions are included.

Packing costs

Cost of containers and packing is included in the customs value.

Assists

Materials, tools, dies or molds supplied free or at reduced cost by the buyer are added.

Royalties & licence fees

Paid as a condition of sale may be added.

Proceeds of resale

Any portion of proceeds from subsequent resale that accrues to the seller is added.

Types of Duties

Not All Tariffs Work the Same Way

Understanding the type of duty is crucial — it affects how you calculate landed cost and what mitigation strategies are available.

Ad valorem

Most common

A percentage of the customs value. Example: 12% on apparel. Simple to calculate but the duty amount rises with the invoice value.

Specific duty

Fixed per unit

A fixed amount per unit of measure regardless of value. Example: €0.50/kg or $1.20/piece. Common for agricultural products, alcohol, and tobacco.

Compound duty

Hybrid

A combination of ad valorem and specific. Example: 6.2% + $0.90/kg. Ensures a minimum duty revenue regardless of low declared values.

Anti-dumping duty (ADD)

Punitive

Imposed when imports are sold below cost in the destination market. Highly product- and country-specific. Can be 15–100%+ and can appear without prior warning on specific HTS codes.

Countervailing duty (CVD)

Punitive

Offsets foreign government subsidies. Applied on top of regular duties. Often goes hand-in-hand with anti-dumping investigations.

Safeguard tariff

Temporary

Emergency measure to protect a domestic industry from a sudden surge of imports. Usually temporary and subject to WTO challenge. Example: US Section 201 solar tariffs.

Section 301 tariff (US)

US-specific

Additional US tariffs on Chinese goods under Section 301 of the Trade Act of 1974. Lists 1–4 cover most goods from China at 7.5–25% on top of the MFN rate. Regularly updated.

Section 232 tariff (US)

US-specific

US national security tariffs: 25% on most steel imports and 10% on aluminum. Applied regardless of origin, though some countries have quota-based exemptions (EU, UK, Japan, etc.).

VAT / GST at import

Import VAT or GST is charged separately from customs duty and is typically recoverable by VAT-registered businesses. It is calculated on the customs value plus duty (and sometimes freight). Non-VAT-registered importers — including most consumers — cannot recover this cost, making it a permanent expense.

Standard VAT/GST rates at import

United States: No federal VAT. State sales/use tax applies but is not collected at the border.

European Union: 20% (standard; varies by member state and product type)

United Kingdom: 20% (recoverable by VAT-registered importers)

Australia: 10% GST

Canada: 5% GST (+ provincial taxes)

Japan: 10% consumption tax

China: 13% VAT (9% on food and agricultural goods)

Preferential Rates

Free Trade Agreements & Rules of Origin

An FTA can reduce your duty rate to 0% — but only if your goods actually qualify. Rules of origin are the most commonly misunderstood requirement.

What are rules of origin?

Rules of origin (RoO) determine whether a product 'originates' in an FTA partner country and therefore qualifies for the preferential rate. Meeting an FTA's RoO requires you to prove — with documentation — that the goods were sufficiently processed or transformed within the partner country. Simply shipping goods through an FTA country does not make them originate there.

Common origin criteria

Wholly obtained

Goods entirely grown, harvested, or produced in one country (e.g. agricultural products, minerals). Easiest to qualify.

Change in tariff classification (CTC)

The production process changes the HS code of the inputs. The specific level of change (chapter, heading, subheading) varies by FTA and product.

Value-added threshold

A minimum percentage of the product's value must be added in the partner country. Typically 35–60% regional value content (RVC).

Specific manufacturing process

Certain production operations must be performed in the partner country. Common for textiles (yarn-forward rule) and chemicals.

Required origin documentation

Certificate of origin (preferential)

EU Form A (GSP), EUR.1 movement certificate, or origin declaration. Must reference the specific FTA.

Importer's knowledge

Under some FTAs (USMCA, CETA), the importer can claim preference based on their own knowledge of origin, without a certificate from the exporter.

Statement on invoice

Approved exporters can make an origin declaration directly on the commercial invoice for shipments up to a defined value threshold.

Major FTAs at a glance

Agreement	Parties	Key point
USMCA	US, Canada, Mexico	Replaced NAFTA in 2020. Most goods between the three countries qualify for 0% duty with certificate of origin.
EU–Vietnam (EVFTA)	EU + Vietnam	In force since 2020. Eliminates duties on ~99% of goods over 10 years. Major benefit for Vietnamese apparel, electronics, seafood exporters.
RCEP	15 Asia-Pacific countries incl. China, Japan, South Korea, ASEAN	World's largest FTA by trade volume. Primarily a tariff reduction framework; full preferential rates phase in over 20 years.
CPTPP	11 countries incl. Canada, Australia, Japan, Vietnam, Mexico	High-quality 21st-century agreement. UK acceded in 2024. Covers 99%+ tariff lines eventually reaching 0%.
EU–South Korea	EU + South Korea	In force since 2011. Eliminates duties on virtually all industrial goods. Major benefit for Korean auto and electronics exports.
ChAFTA	China + Australia	In force since 2015. Australian exports to China (beef, wine, seafood, wool) largely at 0%. Chinese manufactured goods to Australia at reduced rates.

Duty Optimization

Six Ways to Legally Reduce Your Duty Bill

Verify your HTS/CN code

The single highest-impact step. Many importers use an incorrect or overly conservative code. A more precise classification can reduce your duty rate by 5–15 percentage points on the same physical product.

Claim FTA preference

If your supplier is in an FTA partner country, request a certificate of origin and claim the preferential rate. Many importers leave FTA savings unclaimed simply because they don't ask.

Restructure sourcing or production

Shifting production to an FTA partner country or adding qualifying value-added steps can change origin and unlock preferential rates. Takes planning but delivers ongoing savings.

Use bonded warehouses or FTZs

Bonded warehouses and Free Trade Zones allow you to defer or avoid duty on goods that are re-exported or transformed further. Ideal for goods in transit or used in manufacturing.

Apply for duty drawback

In many countries, you can claim back 99% of duties paid on imported goods that are subsequently re-exported or used in goods that are exported. Drawback programs are underutilized.

Consider first sale valuation

In the US, importers can declare customs value based on the first sale price (e.g., factory price) rather than the last sale price (e.g., middleman price), legally reducing the dutiable value.

FAQ

Frequently Asked Questions

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