To estimate landed cost, you need the product value, freight charges, insurance, applicable import duties, and VAT. iCustoms provides a built-in landed cost calculator, i.e., iCalculator, that combines all elements to give you full visibility of your import expenses.
A tariff is a government-imposed tax on goods crossing international borders, typically on imports, though some countries also tax exports. Tariffs serve multiple purposes: generating revenue, protecting domestic industries (e.g., U.S. steel tariffs), and influencing foreign policy (e.g., China-U.S. trade war tariffs).
For example, in 2018, the U.S. imposed 25% tariffs on $250 billion worth of Chinese goods, significantly affecting electronics and machinery imports. Tariffs are enforced by customs authorities and must be paid before goods are released. Failure to pay can result in seizure or storage fees.
Import duties are taxes collected by customs when goods enter a country. They are based on:
HS code classification
Declared value (customs value)
Country of origin
Weight or quantity (for specific duties)
For example, importing olive oil into the EU from a non-EU country may incur a €0.58 per kg duty. Duties fund public services and protect local producers. Some goods (e.g., raw materials for manufacturing) may qualify for duty relief under bonded warehouse programs.
Export duties are taxes levied by a government on goods as they are sent out of a country. These taxes are also known as export tariffs and are paid by the seller to customs authorities before the goods leave the exporting country.
While less common than import duties, they are typically applied to specific products like raw materials, agricultural goods, or items crucial to the country’s economy.
In 2023, Kazakhstan imposed temporary export duties on gasoline to stabilise domestic supply. Exporters should check the export control list of their home country before shipping.
A tariff refers to the official tax rate or policy set by a government on imported (and sometimes exported) goods. It’s essentially the “price list” or schedule of taxes that a country imposes on foreign goods.
Example:
The U.S. government sets a tariff of 2.5% on imported cars from non-FTA countries. This rate is part of public trade policy and can be found in the HTS.
Tariff = The published tax rate (e.g., 10% on shoes).
A duty is the actual money an importer pays at the border based on the applicable tariff. It’s the real-world cost calculated using the tariff rate, the value of the goods, and other factors like weight or quantity. Duty is collected by customs authorities (e.g., CBP in the U.S., HMRC in the UK).
Example:
You import a shipment of shoes valued at $10,000, and the tariff on shoes is 12%.
The duty you pay = 12% × $10,000 = $1,200.
Duty = The actual payment (e.g., $1,200 you owe).
National governments via customs agencies (e.g., CBP in the U.S., UK HMRC).
Trade ministries negotiate international rates.
Regional blocs like the EU set common external tariffs.
WTO oversees global trade rules and dispute resolution.
Tariff changes often follow political or economic events. For example, the UK revised its Global Tariff post-Brexit, removing duties on 80% of imports to boost trade.
No, exemptions include:
De minimis thresholds: U.S. ($800), UK (£135), Canada (CAD $20).
Free trade agreements: USMCA, EU-UK TCA.
Charitable donations with proper documentation.
Returned goods under duty drawback.
Example: A Canadian consumer importing a $15 book from the U.S. pays no duty or GST due to de minimis rules.
Caution: De minimis doesn’t apply to alcohol, tobacco, or regulated goods.
You may owe:
Import duty: Based on HS code and CIF value.
VAT/GST: On landed cost (e.g., 20% VAT in UK on $1,500 + $150 duty = $1,650 → $330 VAT).
Excise duty: On alcohol, tobacco, fuel (e.g., $1.03 per liter of wine in Canada).
Customs processing fees: $25–$100 per entry in the U.S.
Example: A $5,000 shipment of whiskey to the UK:
Duty: £120
VAT: 20% of (£5,000 + £120 + freight) = ~£1,024
Use a landed cost calculator, such as iCalculator to estimate total fees.
The landed cost is the total cost to purchase an imported product and deliver it to its final destination, including manufacturing, shipping, insurance, customs duties, taxes, and other fees.
It encompasses all expenses from the product’s origin to the buyer’s door, providing a true understanding of the total cost for accurate pricing and profitability assessment.
Landed cost = Product cost + Shipping + Insurance + Import duty + VAT/GST + Brokerage + Handling + Port fees.
A customs bond is a contract between three parties (Customs, a principal (i.e. an importer), and a surety) to ensure that all the duties and fees associated with the rules and regulations of importing or other Customs activities are paid to Customs by the principal.
It is a requirement to import into the US as per US Customs regulations, and as such, an importer should obtain a bond through a reputable and reliable company.
The threshold below which duties and taxes are waived. Varies by country:
USA: $800 (Section 321) – huge advantage for e-commerce.
UK: £135
EU: €150
Canada: CAD $20 (low, so most imports are taxed)
Australia: AUD $1,000 (for GST)
E-commerce Impact: Amazon and Shopify sellers use de minimis to ship small parcels duty-free.
Warning: Multiple shipments to the same person may be aggregated to bypass the de minimis.
Consequences include:
Goods held at port (storage fees: $50–$200/day).
Seizure and auction.
Fines up to 2x the duty owed.
Loss of importer status.
Criminal charges for fraud.
Example: In 2022, CBP seized $1.2 billion in undervalued goods
These are trade remedies used to protect domestic industries:
Anti‑dumping duties respond to imports sold at less than the normal value that harm domestic producers.
Countervailing duties (CVDs) offset subsidies provided by foreign governments to exporters.
Safeguards are temporary duties or restrictions imposed when surges of imports cause serious injury. These measures follow specific investigation processes and legal tests under domestic law and international agreements.
Duty drawback refunds duties (and sometimes taxes) paid on imported goods that are later exported or used to produce exported goods. Drawback programs have strict record-keeping and timing rules; rebates depend on national legislation and proof of export. Proper planning can recover significant duty costs for exporters.
A bonded warehouse is a customs-authorised storage facility where imported goods can be stored without immediate payment of duties.
Duties become payable only when goods leave the warehouse for domestic consumption. Bonded storage is useful for duty deferral, re-export without duty, or processing while delaying duty payment.
An FTA is a treaty between two or more countries to reduce or eliminate tariffs and other barriers between them.
If goods qualify under the FTA’s RoO, importers can claim preferential tariff treatment, often saving significant duty. Each FTA has its own RoO, documentation rules, and administrative procedures.
Rules of origin (RoO) define when a product “originates” in a particular country for preferential tariff purposes. RoO may require completely obtained goods, specific manufacturing operations, or a % regional value content.
If a product meets the RoO of an FTA or preference scheme, it may benefit from reduced or zero tariffs, but you must substantiate the claim with a certificate or an exporter’s declaration.
The Importer of Record is the legal entity responsible for bringing goods into a country and ensuring compliance. The IOR files customs entries, pays duties/taxes, and keeps required records. Contractual terms (Incoterms) determine commercial responsibility, but legal liability for customs compliance follows the IOR designation.
CIF (Cost, Insurance, Freight) includes the cost of the goods, international freight, and insurance to the named port; FOB (Free On Board) does not include international freight/insurance; it covers costs until goods are loaded on the vessel.
Some authorities calculate duties on CIF, others on FOB plus specified additions. Check the valuation rules in the importing country.
Basic formula (most common):
Customs Duty = (Customs Value) × (Duty Rate)
Customs value is usually the transaction value plus permitted additions. For specific duties, compute per unit. Additional taxes, VAT/GST and excise, are often calculated after adding duties to the customs value (landing cost basis), so plan for cascading charges.