Ultimate Guide for Import Tax from China to the US

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The implementation of the first phase of the agreement between the US and China on 14 February 2020 established new US tariffs on imports from China for the foreseeable future. The average US tariff on imports from China remains as high as 19.3%. These tariffs are more than six times higher than they were before the trade war began in 2018. These tariffs cover 66.4% of China’s exports to the US.

China’s average tariffs on imports from the US also remain high at 20.7%. China’s retaliatory tariffs continue to cover 58.3% of US exports to China. on 17 February 2020, the Chinese government announced an exclusion procedure whereby Chinese companies can apply for a temporary exemption from retaliatory tariffs. However, questions remain about whether China will be able to meet its commitment to purchase an additional US$200 billion of US goods and services in 2020 and 2021, as described in the legal agreement signed on 15 January 2020.

Overall, the trade war takes place in five phases between 2018 and 2021. the first six months of 2018 were characterized by only modest tariff increases. the months between July and September 2018 saw a sharp increase in tariffs on both sides. The average tariff in the United States increased from 3.8% to 12.0%, while the average tariff in China increased from 7.2% to 18.3%. In the third phase, there is an eight-month period (25 September 2018 to June 2019) where there is little change in tariffs. From June to September 2019, another set of tariff increases began. In the current fifth phase, tariffs between the two countries remain elevated and are the new normal, despite the first phase of the agreement.

During the same period, China has reduced its tariffs on imports from the rest of the world. China’s average tariff on these exporters has been reduced from 8.0% at the beginning of 2018 to 6.1% at the beginning of 2021. During the same period, the average US tariff on imports from the rest of the world has increased from 2.2% to 3.0%.

When importing products from China, it is important to understand import tariffs, customs fees, and clearance documentation. As an importer, Made in China is a great option and many products can be sold locally or online at great profit. Tariffs depend on the products and goods you import into the USA from China, which makes the whole international trade process seem complicated for new importers. This article will help you understand the tariffs on goods imported into the USA from China and how to check the tariffs on each product. Let’s take an in-depth look at import duties from China to the USA.

As a new importer, it is important for you to know that US Customs imposes duties on all imports valued at $800 or more. Those valued at less than $800 are duty-free. However, since 30 June 2018, the US has increased tariffs on $50 billion of Chinese goods by 25%, which has increased the cost to US consumers.

This article will allow you to learn more about import tariffs and customs clearance issues.

When did the tax exemption for imported goods from the United States, increase from $200 to $800?

On 24 February 2016, former US President Barack Obama signed the Trade Facilitation and Trade Enforcement Act of 2015, which increased the import duty-free amount from US$200 to US$800, which was implemented by the US Customs and Border Protection on 10 March 2016. The duty-free amount means that eligible goods below the required $800 are exempt from customs declaration and are not subject to duties or taxes. This means that most shipments of goods under $800 will be exempt from customs clearance and import duties.

This move has not only motivated US consumers but has also inspired many e-commerce sellers to consider shipping by courier. However, there are conditions and exceptions to the exemption rule, and according to U.S. customs regulation 19cfr10.151, goods that benefit from this exemption need to meet the following requirements.

(1) The goods must be imported by the same person on the same day.

(2) Combined goods delivered to the same ultimate consignee will be treated as a single importation (i.e., the importation of several goods by the same person on the same day adding up to more than $800 is not tax-deductible)

(3) Alcoholic beverages, perfumes containing alcohol (unless the total fair retail value of all goods in the country of shipment does not exceed US$5), cigars, or cigarettes are not duty-free.

If the goods are considered by Customs to be one of several shipments under an order or contract and are shipped separately for the purpose of free entry (duty-free) or to avoid compliance with any relevant laws and regulations, such cases are not duty-free. Goods falling under a tariff quota are not exempt from duty (for example, products falling under a tariff quota are not exempt from duty). Goods that are regulated are not tax-exempt if one or more cooperating government agencies request information (for example, goods regulated by the FDA are not tax-exempt).

Even if your declaration is for less than $800, US Customs still has the right to request official clearance. As long as Customs suspects that the low value of the shipment is an attempt to avoid compliance with certain relevant laws, the goods may be denied duty-free. Alternatively, if your declared amount is less than US$800 but US Customs suspects that you have deliberately under-declared the goods, a reassessment of the goods is carried out and if the valuation is higher than US$800, then tax is still payable.

HS Coding

Customs duty is not based solely on declared value – it also varies from product to product. However, customs officers are busy people. They do not have the time to open each carton and classify it. Instead, the HS code specifies the type of product. The HS code (Harmonised Commodity Description and Coding System) is part of the international classification system and makes the process very simple.

However, you can make sure that you specify the correct HS code on your commercial invoice. Otherwise, you will end up paying customs duty rates based on the wrong product. For the correct HS code, you can look it up online at US Customs or have your clearance agent provide it to you. If you are using a customs clearance agent to help you clear customs, you should follow the customs clearance agent’s requirements.

Declared Value

Tariffs and taxes are calculated as a percentage of the customs value. The customs value is based on the declared value, which should be stated on the commercial invoice – a document issued by the supplier. It is vital that the correct value is declared on the commercial invoice, otherwise, you could end up paying the wrong amount. It is always the importer’s responsibility to ensure that the correct declared value is stated on the commercial invoice. This responsibility cannot be transferred to the Chinese supplier. You must confirm the value of all declared products with your Chinese supplier prior to shipping.

Tip. It is well known that low declarations can reduce the cost of entering goods into customs and increase the competitiveness of your products. However, customs are no fools. Every product is declared by customs when it enters the customs system based on the market price. If your goods are significantly below the price set by Customs, then the goods will be transferred directly to the inspection department by Customs, who will charge hundreds to thousands of dollars for the inspection.

What is the US import tariff rate?

US tariffs are an unavoidable problem for every US-China express parcel. Both US air and US sea shipments are subject to US tariffs, with a minimum of US$30 and no limit. Goods valued at less than US$800 are duty-free. Of course, there are many customers who choose to use the US express channel to avoid tariffs.

(1) Tariffs on apparel products (cotton category: 16%)

Customers who have been in the apparel industry know that there are simply too many tariff classifications for clothing. There can be the same style of clothing with different materials, but the tariffs will be different. There are also differences in tariffs between men’s and women’s clothing and children’s clothing, tariffs between formal and casual clothing, and different tariffs on clothing fabrics before.

(2) Tariffs on LED products (LED lights: 3.9%)

LEDs may not be as diverse as the tariffs for the classification of clothing products. the tariff for LED lamps is generally 3.9%, but the tariff for LEDs is different from the tariff for LED lamps.

(3) Tariffs on furniture products (Furniture: 1%)

Furniture also accounts for a relatively large proportion of China’s exports to the United States. The tariff on furniture products is, generally, around 1%. However, sometimes there are products involved in anti-dumping in furniture, and the anti-dumping duty can be as high as 227%, such as bedroom beds.

(4) Tariffs on solar energy products (anti-dumping)

Currently, solar energy products are in the anti-dumping stage in the US, so many customers exporting such products are deterred by the sight of such high anti-dumping duties.

Import Precautions (goods from China)

A: If it is heavy, the customs will determine that there must be a wooden package, you need to provide a fumigation certificate. If there is no wooden packaging, you must declare non-wood packaging (NON-WOOD PACKING) on all documents. Although the shipping company’s weight limit for the container is 44,000 pounds, the standard weight of the shipping company is 38,000 pounds. If the weight exceeds this weight in the US inland transportation, the truck company will require the use of its own special triangular or four-corner car frame. To ensure safe driving. In many states in the United States, this restriction is very strict and requires the transport of ultra-heavy container trucks for applications and permits. Since the cost of owning a car frame and license is extra, please note that the price is applicable to goods below 38,000 pounds when making inland-to-door service quotations. If the container exceeds 43,000 pounds, many inland states are not allowed to go on the road, and a special triangle or four-corner car frame must be used.

B: It must be labeled “Made in China” on the product. If not, Customs will require the sale of labels, especially for mass-market consumer goods, so be prepared.

C: Food.

The United States has strict import requirements for food and food-related goods. In addition to reporting customs, it is also required to declare that the FDA (FOOD & DRUG ADMINISTRATION) will release the goods before both parties can pick them up the goods. Customs agencies typically increase FDA Service fees.

D: For customs clearance inland, you need to do a customs transit (cut I.T .—Immediate Transit). We need to provide I.T. #, DATE ISSUED, PLACE ISSUED, and End. Inland Customs will use I.T # for control and release.

E: Since March 2003 U.S. Customs has been testing the AMS system. NVOCC sent it to the U.S. Customs clearance through Speedpost within 24 hours of departure. Some of the cargo NVOCC, still commissioned shipping company VOCC to do AMS. So we need to pay particular attention to who does the AMS. U.S. Customs uses only AMS numbers to identify different shipments. AMS No. includes important parts of the AMS FILER code SCAC Code. Declarations are indispensable.

F: Release the cargo.

(1) In the previous ABI system, shipping lines and terminals were directly linked to Customs, which meant that if Customs released them in ABI, shipping lines and terminals could see them. After the AMS test run, major shipping companies such as EVERGREEN, APL, MAERSK, COSCO, CSCL, etc. They were also connected to AMS, but not the terminal. Customs can therefore release an AMS. The shipping lines and NVOCC AMS FILER can be viewed simultaneously. Shipping companies help upgrade terminal systems at the same time; small shipping companies such as SINOTRANS, LYKES, and GWS. We don’t have an AMS online, so we can only fax it through NVOCC AMS FILER fax. NVOCC guarantees a letter and a customs pass (customs form 3461). These shipping companies will receive faxes and manual updates through the terminal system. As you can imagine, manual publishing can lead to a doubling of workload, as well as human error and customer data breaches.

(2) Dock/shipping company releases goods.

The docks and shipping lines are connected. If freight is paid in advance, the bill of lading will be sent by telex. Once cleared, the docks automatically hand over the goods to the truck company. In the United States, customers do not need to exchange bills of lading, so US agents cannot help detain goods. This is nothing like China.

If the shipping company’s bill of lading is sent by telex and the freight is paid in advance, the shipping company will send the freight as soon as it is received, regardless of who pays the freight. The only thing controlling delivery is the owner’s original bill of lading. SSL would not release the goods without the original bill of lading.

All trucks going to the docker must sign agreements (exchange agreements) with shipping companies and docks. Guaranteed to bear the loss and demurrage fee box. Otherwise, trucking companies and docks won’t put cabinets on trucks.

3) Inland release.

For inland cargo, after customs clearance, the freight company will give a PICKUPnumber, the agent will get the PICKUP number and notify C /, and the truck company will then use that number to pick up the cargo.

How to get Pick UP number?

A: The goods arrived and were unloaded.

B: After the customs release, the freight company can pick up the goods. If anyone of them is missing, it will not be available.

AMS IC and VSSL ARRIVAL

VSSL ARRIVAL: Notify Customs the day the ship arrives at the port of destination. This is based on an actual port of arrival and does not count the situation at the previous port of arrival.

AMS IC: After customs clearance, the AMS system will automatically display clearance information, indicating customs clearance. Almost all goods destined for the port can be declared before the arrival of the ship and the customs clearance results can be displayed. While many inland goods can be used for PRE-CLEAR, freight companies need to know if they will be released on arrival. After AMS, many NVOCCs forgot about ARRIVALI.T, which resulted in the goods not being released after customs clearance. 

Customs Fines

If the customs duties are not paid on time, the customs will impose a fine with interest. Goods must be declared to customs within 15 days. If there is still no one to report to the customs after 15 days, the customs will question the safety of the goods and transfer the goods to the supervision warehouse ( GO WAREHOUSE) Unloading to inspect the container. At this time, clearance needs to be made through a supervision number (GONO). If goods enter a supervision warehouse (O.WHSE-General Order). The following costs would arise.

1. Demurrage fee or railway Demurrage fee.
2. The cabinet fee and returning cabinet fee
3. Warehouse decommissioning fee and loading fee.
4. Warehouse storage fee. Container costs.

Only pay these fees and pay the shipping fee to the shipping company in exchange for the LIEN notice to pick up the goods. If the customs formalities have not been completed within six months, the customs shall confiscate them and auction them off against the storage expenses.

Free Storage Period for Docks

The storage period at most terminals is five days (from the time the container is hoisted from the ship and from the time it is picked up). Note, after the free period, you have to pay the storage fee for holidays and weekends. Rickmers’ Houston dock has only a three-day free period. 

Demurrage Fees

No matter where the cargoes come from, you usually pay $60 a day for the first five days at the terminal, then $120 a day. However, for terminals such as Hanjin and COSCO, the overdue demurrage fee is US $100 / day PER CTNR. Shipping companies and docks are different companies. Demurrage charges will be charged if the goods are not picked up after five days. If it is the responsibility of the shipping company, the terminal will charge the shipping company according to the agreement. If the shipping company does not, the terminal will charge the extractor fee.

Remarks: Shipping companies have no control over demurrage charges at terminals. That doesn’t mean shipping companies are exempt from demurrage charges, but it can help with discounts or cover some demurrage. However, particular areas, such as SAVANNAH, CSCL, and docks have long-term contracts, so they have more room to control demurrage charges.

Summary

You might think the customs clearance process looks complicated. But with the help of a customs clearance agent, you can easily receive the goods in a timely manner because the customs clearance agent is professional and has a good understanding of the customs clearance process. In the end, you only have to pay a small fee.

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