Sailing Smoothly: HongOcean on Taxes to Import from China

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The United States, as a systemic superpower, maintains the principal of an open economy involving relatively simple external trade relations.

The U.S. has not fully supported import trade due to the following considerations: Though the U.S wants to foster friendly trade environment, these factors are still a barrier when it comes to import trade:

As your one-stop foreign trading partner, HongOcean has created the following guide to provide you with an extensive insight of import restrictions and the existing import duties based in the United States of America.

What costs are involved when importing from China to the US?

Costs Involved When Importing from China to the U.S.: A Guide by HongOcean

Whether entering China exportations formally where the imported goods value is more than $2,500 or informally where the value is less than $2,500, the importer will be subjected to several fees charged by the customs authority, the U.S Customs and Border Protection (CBP) agency. Here are the major costs that you are likely to meet.

Import Duty

Import duty rates comprise the greatest part of the taxes on imports. It costs $799 or more in retail sales; additional import duties and taxes are charged for the items. These duty rates can be specific where duty is fixed for a particular quantity, for instance, $0.198 per liter or ad valorem, meaning that the duties are estimated to be 3.2% of US$7000. The applicable is determined by HS codes of the client’s goods that are used in shipping, exporting, and importing merchandise. However, there are other small import tariffs and charges that we will look at below.

Federal Excise Tax

The Federal Excise Tax is paid for specific goods, including tobacco and alcoholic products. Even though the shipments do not contain these items, then the company will not be charged this fee. In general, the tariff applied to goods imported into the US from China is the standard tariff plus any additional tariff that has been put in place. The following are the other import costs and multiple taxes that may be handled by you.

Merchandising Processing Fee

MPF is a type of user fee that is chargeable to virtually all imported products across the globe. For informal entries, the MPF is a fixed amount of $2.00, $6.00, or $9.00 per shipment. For formal entries restricted entries and special rates, the MPF is at the rate of 0.3464 percent of the declared value of the import goods but subject to a minimum fee of 27.20 dollars and a maximum fee of 528.33 dollars.

Harbor Maintenance Fee

Specifically, the Harbor Maintenance Fee (HMF) applies only to ocean freight shipments and not air shipments in any way. This fee is however charged per shipping invoice at 0.125% of the total value of the goods upon delivery in addition to ten times the base fee.

Please find further details of the various affordable fees customs charges that apply in accordance to the type of import as shown in the table below. It is important to note that this table reflects general cargo exports, not including such export-specific types as alcohol or tobacco.

Value of GoodsShipping MethodApplicable Import Fees
Less than US$ 800Sea FreightMPF (informal entry) + HMF
Less than US$ 800Air FreightMPF (informal entry)
US$ 800 – US$ 2,500Sea FreightImport Duty + MPF (informal entry) + HMF
US$ 800 – US$ 2,500Air FreightImport Duty + MPF (informal entry)
Greater than US$ 2,500Sea FreightImport Duty + MPF (formal entry) + HMFImport Duty + MPF (formal entry)
Greater than US$ 2,500Air Freight

This breakdown by HongOcean ensures that you have a clear understanding of the customs fees are associated with different types of imports to the U.S.

What is the extra customs duty tariff for Chinese imports? 

Understanding the Extra Customs Duty Tariff for Chinese Imports: A HongOcean Guide

After the increase of tariffs on Chinese imports under ex-president Trump, many importers do not know if their goods are subject to the additional 25% tariff. You may also be wondering if one can or should still be importing from China or if it is more economical to look for another supplier. The good news is that the U.S. is now considering ways to lower tariffs on some of our import of Chinese goods. Now, let’s focus on various additional lists of tariffs.

Additional Tariff List 1 & 2

The additional 25% tariffs have been applied in three big waves. The first two lists apply an additional 25% duty to roughly $50 billion worth of imports from China; the sectors targeted covered goods that are most significant to the Made in China 2025 strategy. For instance, machinery, electronics, and technology parts that are used in the manufacturing of foods and clothing are among these tariffs. For the specific tariff rates of this particular good from China, you can search with HTS 9903.88.01 or HTS 9903.88.02.

Additional Tariff List 3

This list included an increase of 25 percent tariff on $200 billion worth of goods imported from China. The goods targeted under List 3 include:

  • Tools
  • Food
  • Chemical and construction materials
  • Consumer and agricultural products
  • Commercial electronics
  • Vehicle parts

If your items happen to be under this tariff, then you can search for special rates in HTS 9903.88.03 or HTS 9903.88.04.

Additional Tariff List 4

List 4 raised the 25% tariffs further to cover $300 billion to remain goods imported to the US from China, which effectively was on all Chinese goods. Nonetheless, after signing the “Phase One” deal with the United States, the tariffs on goods valued List 4 were lowered to 7.5%.

How to check your tariff rate

How to Check Your Tariff: A Step-by-Step Guide by HongOcean

In case of importing goods into the U.S., it is important to learn how to the customs rules identify the appropriate tariff rates. To prevent you from making these fatal missteps, HongOcean has written the precise step-by-step guide.

Step 1: Check HS and HTS Codes with HongOcean

HS or HTS code is significant to know before you try to check your tariff rate. Harmonized System, or HS code, is an international system of names and numbers that is used to classify traded products, where each code denotes a particular product category.

The first six digits are global, while countries, Northeast American countries included, can append another two to four numbers for further differentiation. The structure of the HS code is divided into four parts: chapter, heading, subheading, additional digits, and so on. For example, HS code 3924.10.1000 breaks down as follows:

  • Chapter 39: Plastics
  • Heading 3924: Tableware and kitchenware
  • Sub-heading 3924.10: Salt, pepper, ketchup dispensers, and similar items
  • 1000: Further classification, here referring to yogurt dispensers

In the United States, it is called the HTS code, which stands for the Harmonized Tariff Schedule, which reveals the exact tariff to be paid on imports into the U.S. from different countries.

Where to Find Your HS Code: Tips from HongOcean

  • USITC: Another way is to go to the website of the U.S. International Trade Commission (USITC), where you can search for your HS code by a keyword or by description and find the basic duty rates as well.
  • Customs Broker or Freight Forwarder: So, if you are not sure about your product, you should consult your customs broker or international freight forwarder about the correct HS code.

Step 2: Use Your HTS Code to Check Your Import Duty Rate Online with HongOcean

To classify your goods the right way, it MUST be done properly because if you get your classification wrong, it will cost you a lot. There is a distinction between the tariff rate calculated on the basis of your company’s information and the final tariff that is applied by US Customs and Border Protection or CBP. To check your import tax rate, follow these simple steps:

  1. Search HTS Revisions by Chapter: This elimination process is done by going to the USITC website and identifying which sector your product belongs to. Choose the right chapter that corresponds to your product type.
  2. Enter Your HS Code: Type the HS code into the global search bar in the USITC website to get the duty rate for that code (for example, the code 6403.19.1000 has a duty rate of 5%).
  3. Consult Your Logistics Provider: There are several reasons why it is possible to have several final tariffs in a given range, so it is always useful to check with your logistics provider or a freight forwarder, for instance, HongOcean.

Step 3: Check for Additional Duty Rates with HongOcean

Sometimes, there can be an added tariff to your product depending on certain conditions that are at times incomprehensible. For instance, where, due to the U.S.-China trade war, an extra 25% tariff applies, this will be indicated where there is a HS code. For example, in code numbers HS 8408.10.00, the base tariff is set at a level of 2.5%. But under the “General” note, it redirects to sub-heading 9903.88.01, under which an extra 25% tariff is imposed.

Consequently, the new tariff rate for those products falling under this category of products would be 2.5% + 25% = 27.5%.

Step 4: Calculate Your Total Import Taxes and Duties with HongOcean

To fully understand your financial obligations to pay import duty, it’s essential to calculate both the import duty and the total import taxes using the following formulas:

  • Customs Duty = Customs value × Customs duty rate ÷ Imported quantity × Customs duty rate
  • Merchandise Processing Fee (MPF) = Commercial value ÷ 0.0029 × 1 = Commercial value × 0.3464% (with a minimum of $27.20 and a maximum of $528.33)
  • HMF = (Commercial value × 0.125%)

These formulas will help estimate the total value added taxes, duties and fees you will be charged for your import to ensure that your pocket is ready to make those charges so as to make profit.

Customs Duties on Shipments from China

For any consignment originating in China, the customs duty is mandatory if the consignment is worth $800 or more. In case your shipment is over this declared value, the shipment will be subjected to customs clearance due to duty charge per type of product and Harmonized System Code or HS Code or Harmonized Tariff Schedule (HTS) code.

It is vital to comprehend those obligations and avoid such expenses in order to achieve problem-free importation. HongOcean is here to support our clients in the provision of these regulations while keeping your business relevant in the competitive global market.

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