Importing Goods and Wholesale Products into United States

Importing into the US: Papers, Procedures, Duties…and all that palaver

Most people would agree that the most difficult part of importing merchandise is the bureaucratic nightmare that goes with it. We’ve all heard the horror stories of outrageous duties being charged, goods being confiscated and so on. So, in the next few blog posts, we’re going to try and clear up some of the mystery by de-jargonizing the requirements.

Remember that if you don’t want to handle customs yourself, you can use a Customs broker who will clear goods through customs on your behalf and take care of all the technicalities.

Do I need to meet any requirements before I can import goods into the US?

You don’t need a license to act as an importer but you will need a business tax number, which you’ll have to get through the IRS. This is the number you put on all customs paperwork that requires an ‘importer number’.

Note that there are some items that require a license or permit from various government agencies in order to be imported, e.g. plant, animal or dairy products, medications, trademarked and copyrighted material and so on. See http://www.customs.gov/ for more information.

What does the US Customs procedure involve?

Customs is a two-part process: (1) filing the documents necessary to have your products deemed able to be released and (2) filing the documents that contain information for duty assessment. Both of these processes can be completed electronically via the Automated Broker Interface program of the Automated Commercial Systems.

When your documentation is presented, customs officials decide whether or not it is necessary to examine the shipment. If your goods are examined, officials will check that no legal or regulatory violations have occurred and then release your goods.

What are Customs officials looking for when they examine my shipment?

• The value of the goods for customs purposes and to check whether duties apply.
• Whether the goods need to be marked with country of origin or require special marking. If this is lacking, they are then marked to meet regulations.
• Whether the shipment contains prohibited articles.
• Whether the goods are correctly invoiced.
• Whether the goods are in excess of the invoiced quantities or a shortage exists.
• Whether the shipment contains illegal narcotics.

Goods are cleared much faster if:

1. Invoices are clear and contain the information that would be shown on a well-prepared packing slip.
2. Each package is marked and numbered so it can easily be identified against the invoice.
3. A detailed description of the merchandise in each package is on the invoice.
4. The country of origin is clearly marked.
5. Any special laws that apply are complied with. Merchandise such as food, drugs, cosmetics, alcohol and so on will usually fall into this category.
6. Your supplier maintains good security, reducing the risk that narcotics smugglers are able to introduce narcotics into your shipment.

Duties, Tariffs and all the rest….

All goods imported into the United States are subject to duty or duty-free entry depending on their classification in the Harmonized Tariff Schedule of the United States. The full tariff schedule is quite a hefty document about the size of a dictionary! You can purchase an annotated loose-leaf edition of the tariff schedule from the U.S. Government Printing Office, Washington, DC 20402. Or you can find an abridged PDF version here.

The easiest way to find out what you may be charged is by searching for tariffs online at http://dataweb.usitc.gov/. You’ll need to create an account before you can search, but it’s totally free to do so.

There are three types of duties that may be charged: ad valorem, specific, or compound rates. An ad valorem rate is a percentage of the value of the merchandise, such as 5% ad valorem. This is the rate most commonly applied. A specific rate is a specified amount per unit of weight or other quantity, such as 5.9 cents per dozen. A compound rate is a combination of both an ad valorem rate and a specific rate, such as 0.7 cents per kilo plus 10% ad valorem.

Rates of duty for imported merchandise can also depend on the country of origin. When referring to the Harmonized Tariff Schedule, you’ll notice two different columns: General and Statutory. Most goods are covered by the General column (column 1) if they are from what is known as ‘most favored nations’, that is, countries with a trade agreement with the US. Goods from countries to which these rates have not been extended are dutiable at the full or ‘statutory’ rates (column 2).

So am I likely to have to dig deep?

Generally, importing costs from China to US are very reasonable. While the figures always look frightening in documents such as the HTS, you’ll usually find that the tax is very low unless your item is unusual or restricted in some way. Another tip is to stay away from designer replicas as these are subject to more scrutiny and may cause Trade marking and Copyright issues.

If you are particularly worried about getting started, I suggest only importing small lots until you feel more confident with the process. Customs are primarily interested in very large orders and small parcels valued under $1,000 are usually waved on through.

Other Resources

The best source of information is the US customs site

http://www.customs.gov/ – check out the questions area.