While sourcing products from China, one of the cheapest and best sourcing locations in the world, it is good to know all the import tax fees you will have to pay. This will help you avoid surprises such as new fees on your products as they cross from China to US borders.
This will help you understand import tax fees from China to the USA, including tools you can use to calculate and pay your import taxes from China to the USA.
Let’s get started:
目录
A Brief Overview of Import Tax from China to the US
Goods shipped to the USA attract fees and levies from the federal government. Shipments from China specifically have additional tariffs set by the administration running the US government in 2017.
These charges are the purview of the Customs and Border Protection officials who classify entries as formal or Informal.
Formal entry involves goods valued at above $2,500 while informal involves those valued at lower than $2,500.
Paying import tax ensures that the federal government does not consider your shipments illegal. Besides import tax, there are other additional custom duty rates like:
- Custom clearance costs: These are the charges imposed by the state to clear items for entry into their country.
- Inspection cost: Inspections are done at random by the officials. Since it is not done for every product, you only pay the fee if your products are inspected.
- Warehousing cost: This is charged if you use the warehouse at the customs offices to hold your products before they get picked up.
Which Import Tax From China To USA Do You Need to Pay?
Before calculating your import tax from China to the US, it is important to understand which import tax you need to pay, what each imposed tax entails, and under what circumstances the government expects you to pay it.
These taxes are:
#: Import Duty
This tax only applies to traders shipping products worth above $200. For example, you will pay import duty if you ship products worth $1200. You get a free pass from this particular tax for orders under this.
#: Merchandise Processing Fee
This fee applies to all items shipped from China to the US through all modes of transportation. The purpose of this fee is to help facilitate custom and trade compliance. This fee is, however, categorized depending on the value of the order.
For orders below 2500, you pay an average of $2 to $9, determined through a set of conditions which are:
| For personal goods, automatic | $2 if not processed by the Customs Border Patrol |
| For personal use, manual-$ | $6 if not processed by the Customs Border Patrol |
| For personal use, manual | $9 if processed by the Customs Border Patrol |
For orders above $2500, you pay 0.3464% on the goods.
Merchandise Processing Fee = Cargo Value x 0.3464%
This means for any order above $2500, the fee increases with an increase in the order value.
However, there is a $26 Minimum cap and a $485 Maximum cap on the fee payment.
#: Harbor Maintenance Fee
You pay a fee of 0.12% on the value of the goods. This fee only applies to sea freight orders. This goes to the maintenance of the sea.
#: Federal Excise Tax
This tax only applies to alcohol and tobacco imports —it’s the state’s indirect way of increasing the products’ price.
#: Section 301 Tariffs
These taxes were introduced in 2017 by the US administration to punish China for unfair trade practices that included technology transfer. These taxes sought to make up for these violations. This was done in 4 stages that involved goods of different annual trading values.
| The first stage targeted industrial technologies | An annual trading value of $34 Billion at 25%, including items like motor vehicles, boilers, and engines. |
| The Second stage targeted industrial raw materials | An annual trading value of $16 Billion at 25%, including items like Silicone, Nitrates, and Petroleum. |
| The third stage | An annual trading value of $200 Billion at 25%, including products like dairy, eggs, and vegetables. |
| The fourth stage | An annual trading value of $300 Billion at 7.5%, including items like books, alcohol, and tobacco, among others. |
#: AD/CVD (Anti-dumping and Countervailing Duties)
These are additional fees levied by the Department of Commerce in the USA to discourage the importation of some sensitive products.
The AC duty comes in when custom officials determine that manufacturers are selling products at lower than market price. If these duties are not imposed, it leads to dumping, which causes harm to the home country’s industries.
The CVD is issued when a foreign government offers subsidies or lower-rated loans to the industry. This leads to the production of items at a lower cost, giving them an advantage over domestic companies.
How to Calculate Import Duty/Tax from China to the USA
Total tax owed depends on several things, including the shipped items’ type, number, and prices.
The main costs you’ll need to consider when making your calculations are:
US Import Tax = Duty + Merchandise Processing Fee + Harbor Maintenance Fee
Step 1: Get the product HS or HTS Code
HS stands for Harmonized System, while HTS stands for Harmonized Tariff Schedule. An HS code gives information on a product, like the product category, product name, and country of origin.
How Do You Check the HS code?
To check on this, you must visit the official HTS website. Next, you need to key in your query in the search bar.
It is important to note that the HTS code in China customs can differ from what you find on the website.
You will get a list of different HTS codes. You can then go through them to find which fits your product. An HTS code has ten digits and is structured as follows:
- Six-digit identification code
- 5000 commodity groups
- 99 chapters
- Each chapter comprises 21 sections
Step 2: Check import Tax online
Start by determining the tariffs for the product you want to ship from China to the US.
US Tariffs Levy (Declaration Value)
As for the US tariffs, the fee is charged differently per the value of the order made.
| Under $800 | Free of Tax |
| Between $800-2500 | you are only required to pay for the customs duties since this is considered an informal customs clearance. |
| The values above $2500 | You get to pay both the customs fee and the MPF. This is considered a formal customs clearance. |
To calculate this, you will need this formula:
To get the Duty rate of the product, key in the HTS code you found in the first step.
Step 3: Check for Additional Custom Duty Rates
As mentioned earlier on the section 301 tariffs, some products get charged an additional rate. This is due to the trade war between China and the USA.
What do the 1 and 2 in the US tariffs mean?
- The General on Tariff 1 covers most imported products. This covers Chinese products.
- The special on Tariff 1 covers countries with relevant FTA with the USA.
- Tariff 2 is for countries with no trade relations with the US. These are countries like Cuba and North Korea.
For example, additional general duty tax is explained in part of the Chapter Notes. This shows an additional 25% rate on the order.
After determining the current tariffs, you should start calculating the total tax due.
The calculations consist of these parts:
| Customs Duty | customs value * customs duty rate / imported quantity * customs duty rate |
| MPF Fee | commercial value * 0.3464% (not less than $26 and more than $485) |
| HMF Fee | commercial value * 0.125% |
Case Study Example 1 of Calculating Total Import Tax Owed
Let’s say that you find a Chinese supplier for blankets and traveling rugs of synthetic fibers worth $3000 to be shipped by sea freight.
Here is how to calculate the total tax owed.
The declared value of goods= is $3000
You’ll usually find this written on the invoice.
The next step is to find the HS code using the tool. The supplier can also provide this.
The HS code provided is 6301.40.0010.
The current rate for the item is 8.5% + the additional 7.5% bringing it to a total of 16%
With these values, you can get the total calculations.
| Custom Duty: | customs duty x rate of duty 3000 x 16% =$480 |
| MPF Fee | commercial value x 0.3464%3000 x 0.3464% = 10.392 (which is less than $26 which means the minimum rate applies) |
| HMF Fee | commercial value x 0.125% 3000 x 0.125% =3.75 |
| Total Import Tax | $480 +$26 +$3.75 =$509.75 |
To make calculating import tax from China to the USA easier, you can use an import calculator to get correct calculations for the fees you need to pay.
https://www.simplyduty.com/import-calculator/
How to Pay China-USA Import Tax
There are several ways to pay China to US import tax. These are:
#: Paying the Freight forwarders
This is a hands-on method that requires a lot of personal input.
First, the cargo arrives at the destination port, allowing officials to inspect it. After the inspection, you then pay import taxes depending on your HS code and additional fees.
If you have an account with a shipping company like FedEx, they can settle the bill for you at an additional fee of about $40 to $80.
#: Paying the Local Customs Authority
Technically, you can’t pay the customs officials directly. On this, you can request a custom credit that allows you to get your products to your warehouse and then pay later.
The customs officials have bank accounts where you must send the money on time.
#: Purchase DDP from your suppliers
Delivery Duty Purchase is a term used in international trade signed in on a contract that lets the supplier cater for all costs until the goods get to the buyer.
This caters to transportation, import tariffs, customs duty, and damages.
This is usually included in the product’s price, resulting in higher prices.
However, the VAT and GST are not part of this since they differ from country to country.
Pro-user Tips for Avoiding or Reducing Import Tax from China to the USA
The following pro-user tips will help you reduce or avoid China to US import tax:
Pro Tip 1: Request the supplier to decrease the product value on the invoice
Custom officials use the prices on the invoice to calculate the taxes you should pay.
By asking the supplier to lower the price on the invoice, you get a better rate on taxes. However, this can work against you if the officials learn about this. They can give you a hefty fine on top of the tax.
This tip is a game of chance because customs officials are notorious for impromptu searches. Therefore, when you ask a supplier to devalue the invoice, ensure the price is not too far off the market value.
Pro Tip 2: Send Products in Batches
This is the most effective legal way to lower your China to US import tax.
As mentioned, Imports from China to the US below $2500 are exempted from customs duty. By shipping products in batches, you can get away with not paying the customs duties.
However, this can come at a disadvantage since you will have to pay the other fees severally depending on the number of batches.
Pro Tip 3: Use Intermediate Trade
The US government imposed an additional 25% on shipments from China. To avoid paying this import tax, you can ask your supplier from China to ship your products to Korea.
The package will read “imports from Korea,” saving you additional fees.
However, this method can work against you since many hands handle the product, increasing the chances of damage and longer or longer shipping times because of the detour.
Pro Tip 4: Timing the Arrival of Products at the Port
When shipping your products, figure out the product’s time of arrival. This helps you have the items arrive when the customs offices are open, which helps eliminate fees like warehouse costs. Again, you get fewer delays, which means products can arrive on time.
Conclusion
As an importer, you must pay the taxes imposed on the products at the port. Understanding how China to US import tax system works can help you save time and money in your next shipment.
From this article, you should be able to get all the relevant information you would need to maneuver through this, figure out which taxes you need to pay and know how to pay them too.
If paying import duty from China to USA seems too complicated for you to handle, feel free to CONTACT US to get the real-time freight rates or help you source and ship your goods.