Import Duty Basics | Global Tariff Rates

What Are Import Duties?

Import duties — also called customs duties or tariffs — are taxes levied by a government on goods brought into the country from abroad. They serve multiple purposes: generating government revenue, protecting domestic industries from foreign competition, and serving as a tool of trade policy and diplomacy.

Every country maintains a tariff schedule that specifies the duty rate for each product category, identified by its HS code. The duty rate can vary dramatically — from 0% on raw materials a country doesn't produce, to over 100% on goods subject to anti-dumping or countervailing measures. Understanding how these duties work is essential for any business involved in importing goods.

Types of Import Duties

Import duties come in several forms, and it's common for a single product to be subject to more than one type:

Ad Valorem Duties

Calculated as a percentage of the customs value of the goods. For example, a 5% ad valorem duty on goods valued at $10,000 results in $500 in duty. This is the most common type of duty worldwide. The customs value is typically the transaction value — the price actually paid or payable for the goods when sold for export.

Specific Duties

A fixed monetary amount per unit of quantity — for example, $0.15 per kilogram or $2.00 per liter. Specific duties are common for agricultural products, beverages, and tobacco. They provide a consistent level of protection regardless of the declared value, which makes them harder to evade through undervaluation.

Compound Duties

A combination of ad valorem and specific duties. For example, “10% + $0.50/kg” means you pay both a percentage of the value and a fixed amount per kilogram. These are common in the US HTS for products like footwear and certain textiles.

Anti-Dumping & Countervailing Duties

Additional duties imposed on specific products from specific countries when an investigation determines that the goods are being sold below fair market value (dumping) or benefit from government subsidies. These can be substantial — often ranging from 20% to over 200% — and are applied on top of the normal duty rate.

How Customs Value Is Determined

The customs value forms the base on which ad valorem duties are calculated. Under the WTO Customs Valuation Agreement (based on GATT Article VII), the primary method is the “transaction value” — the price actually paid or payable for the goods when sold for export to the country of importation, adjusted for certain elements.

Adjustments to the transaction value may include:

Packing costs and container costs borne by the buyer
Assists — materials, tools, or engineering work supplied by the buyer free of charge
Royalties and license fees related to the imported goods
Freight and insurance costs to the port of importation (for CIF-based countries)

The US uses FOB (Free on Board) valuation, meaning freight and insurance to the US port are excluded from the customs value. The EU and UK use CIF (Cost, Insurance, and Freight), which includes these costs. This difference means the same shipment can have different customs values depending on the destination.

Calculating Total Landed Cost

The “landed cost” is the total cost of getting a product from the supplier's factory to your warehouse. Understanding landed cost is critical for pricing decisions, supplier selection, and profitability analysis. Here's what goes into it:

Component	Example
Product cost (FOB)	$10,000
International freight	$1,200
Insurance	$150
Import duty (5% ad valorem on FOB for US)	$500
Merchandise Processing Fee (US)	$34.64
Harbor Maintenance Fee (US)	$12.50
Customs broker fee	$175
Domestic freight	$400
Total landed cost	$12,472.14

In this example, duties and fees add roughly 7.2% to the product cost. For high-duty products — such as textiles, footwear, or goods subject to Section 301 tariffs — the duty component alone can add 25% or more, making accurate classification and duty planning essential for maintaining competitive pricing.

Duty Relief and Exemptions

Several mechanisms exist to reduce or eliminate import duties:

Free Trade Agreements: Products that meet rules of origin requirements under an FTA (such as USMCA, CPTPP, or UK-EU TCA) may qualify for reduced or zero duty rates.
Generalized System of Preferences (GSP): Many developed countries offer duty-free or reduced-duty treatment for imports from developing countries under GSP programs.
Foreign Trade Zones / Bonded Warehouses: Goods stored in designated zones can defer duty payment until the goods enter domestic commerce, or avoid duty entirely if the goods are re-exported.
Temporary Import Provisions: Goods imported temporarily for repair, exhibition, or testing may qualify for duty suspension under ATA Carnet or similar programs.
Duty Drawback: If imported goods are subsequently exported (either in their original form or as part of a manufactured product), you may be able to recover up to 99% of the duties paid.