Import Tax from China to USA: A Complete Guide
China is the largest Manufacturing country of almost all products. Hence, it is very usual that businesses will try to import products from China. US companies are no different.
1. What Is Import Tax from China to the USA?
2. Do I Have to Pay Import Tax from China to the US?
3. How Are Duty Rates Determined?
4. How much Import Tax from China to the USA?
5. What Is the Current Import Tax from China to USA in 2022?
6. How to Calculate Import Duty from China to USA?
7. Where to Check the US Tariff?
8 How to Pay the Import Tax?
9. How to Avoid Tax or Pay Less?
10. Hong Kong to US Import Tax
However, the trade tension between USA and China makes it a little hard. The import tax from China to USA is another concern regarding this. In the following paragraphs, we will discuss the details of import tax from China to USA.
What Is Import Tax from China to the USA?
When you ship goods through international borders, you have to face some trade agreement between the two countries. Import tax or import duty is one such part of trade agreements. In other words, it is the fee you have to pay for passing your products through the international border or customs. That is why it is also called customs duties.
In terms of customs & taxes when importing from China, there are two basic terms that you should know about. One is the tariff, and the other is import duty.
Now, the tariff is a percentage of value-added tax (VAT) implied on imported items. On the other hand, import tax from China to the US is the actual amount of tax. For a product of $1000 with the tariff being 10%, the import duty will be $100. That is the basic difference between tariff and import duty.
In terms of import tax, it varies from country to country. Some countries do not even require customs duty due to their different trade agreements. It also varies by type of product. While importing regular household items takes less tariff and customs duty, luxury or electrical items usually take more.
However, in the case of the USA, the United States Customs and Border Protection (CBP) enforces different rules and regulations regarding customs, and they are the ones to determine the amount of tariff and import duties. We will come to know more about this in the latter part of the article.
Do I Have to Pay Import Tax from China to the US?
In a single word, yes, you will have to pay import duty from China to US. That is because China is not among the countries with the exemption of import taxes.
However, as mentioned before and will be discussed later, you don’t need to pay any import tax for products under a particular value. So one can easily say that it depends on the price of the goods.
At present, goods with prices under $800 are exempt from import taxes, according to US trade policy. That means you do not need to pay any customs fee for items worth up to $800. And for items over $800, fees are compulsory. And the amount of import tax depends on the H.S. code.
How Are Duty Rates Determined?
Determining duty rates is not even close to easy. It depends on a number of factors set by the customs authority. The same goes for custom fees from China to the USA.
In the case of determining duty rates, Harmonized Tariff System (HTS) determines duty rates for every possible item. It is like a reference system, which you can use to determine the duty rates of any particular product. Now let’s come to how the rate is determined.
The whole process takes only two steps, though both of them are quite challenging. Firstly, the product needs to be classified according to its type. Classification specialists need to know the details of the product, like its origin, the different parts it includes, and so on.
The country of origin of the material used in that product is also to be kept in mind. That is because while some countries offer a tax-free supply of some specific product, other countries don’t. Therefore, the country of origin is to be taken into consideration as well.
You can get an approximate idea of the product’s duty rate from the US International Trade Commission-Tariff Database. However, the duty rate will be closer to the actual rate, the more accurate information you provide about the details of the product.
And based on the variations and some points that you might miss, the actual import duty rate will vary a little. Nevertheless, CBP makes the final call about the import rate, not the importer.
How much Import Tax from China to the USA?
Similar to the process of determining the duty rates, the amount of import tax depends on several factors. Firstly, as mentioned before, there is a certain amount below which products are exempted for duty rates.
At present, this amount is $800, which was $200 previously. For certain cases or products, the exempt rate may still be $200. It means that you don’t have to pay for smaller products of below $800, and you must pay for larger goods with the price being at least $800.
US customs fees from China can be described in two parts. One is the formal entry, and the other is the informal entry. Items worth over $2500 fall into this category. As the price of the asset is very high, it must be security-prioritized, and the import must be considered as commercial. To ensure the property safety of such high-priced assets, some sort of surety bond is required.
And for an informal entry, the price of the product must be below $2500. As the price of the product does not seem to be commercial and is not much high, there is no particular requirement for an entrance bond or surety bond to protect such items. However, some particular cases still remain. You can always check the requirements of your products from the port of delivery.
Now, if the product is priced below $800, you won’t need to face any import tax. It also goes for some particular categories of products. For example, textile products are considered as informal entries unless it reaches $2500.
What Is the Current Import Tax from China to USA in 2022?
US import tax from China changes from time to time based on the trade agreements and sometimes trade wars. It also changes when the period of one government ends and another starts.
Here is the import tax from China to USA 2021 calculator. The amount varies based on the type of product, quantity, and so on. The current rates are as follow:
1. Import tax as Merchandise Processing Fee from China to US
This fee implies all imports from China to US. Based on the value of the imported products, they can be sub-categorized into two. Firstly, if the value is below $2500, it can be $9, $6, or $4 per shipment according to the type. And if the price is greater than $2500, the fee will be 0.3464% of the actual value of the imported products. The minimum MPF is $25, while the maximum is $485.
2. Import tax as Harbor Maintenance Fee from China to US
It implies the products imported by sea. It was introduced first in the late 80s. As the name suggests, it is the fee of maintenance cost for the containers and terminals in the USA. Currently, the HMF is 0.125% of the imported cargo. As the amount is very low, it does not affect your import taxes much.
3. Additional Import Taxes
For products requiring federal attention, a federal excise tax applies. You have to pay this additional tax for particular products, like tobacco, alcohol, and so on. But you do not need to pay this additional tax for other products as US does not have VAT. This federal excise tax also does not apply for consumer goods in the United States imported from China.
4. Customs Value
To get the final customs value, HMF, MPF, and customs duties are calculated. The calculation is done according to the Free on Board value of the imported goods. These things are taken into consideration while calculating.
- Export clearance from China
- Product cost
- Transportation cost: It is the leading cost in terms of importing from China ports.
How to Calculate Import Duty from China to USA?
Just like other calculations, calculating import duty from China to USA is critical. A little error in your calculation can cause disaster in your business. That is why you need to know the proper way to calculate import duty from China to USA.
As you want to calculate the import tax from China to US for your product, you need to get your products’ codes verified by HS. Every code from HS has duty rates according to the type of the product, and you have to pay them accordingly. Now, if you are not well aware of Harmonized System (HS) code, here is what it is.
It is a global multifunctional product nomenclature, which was established by WCO. It is now being used for finding the type of imported commodity from different countries to the US, China, in this case. Now, how do you check for the H.S. code? You can go to the official HTS website and type your question in its search box. You will find the results in a chronological pattern: chapter, heading, sub-heading, tariff item, and classification number.
Now comes the next part- to check the import duty rates. You can do it online. There are multiple websites that allow validation of the online import duty rate. However, you can always go for the official HTS website, where you can use the product description to search the item code and verify the exact amount of import duty.
Now let’s go to the process. Once you know the HS product code for your particular product, you can get the import tax rate. And the import tax rate for that code, product in actual, is added to the actual price of the product. And now, the tax will apply for the product even without shipping. This is the regular process.
Now, if your imported product faces an extra 25% duty rate, the product price will go further up. Hence, some importers try to bypass the import duty or reduce it in some way. We will talk about it later in this article.
Where to Check the US Tariff?
As mentioned before, the whole process of determining import duty and tariff rates is organized nicely. You just need to reach the proper websites and media and check your US tariff. CBP, the Bureau of Customs and Border Protection has organized the US Harmonized Tariff Schedule.
You can go through this schedule through different websites. However, the better option is to check the official website: Harmonized Tariff Schedule Search (usitc.gov).
As you find the Harmonized tariff code, you will see that these codes are of six digits. The first two digits imply the chapter, in which the goods are classified in the HS Nomenclature.
The next two digits imply the heading within that chapter. And finally, the last two digits imply the subheading within that chapter.
You can then easily find the right classification for your imported product. The rest is easy. You can then just check the US tariff for your product from right there.
How to Pay the Import Tax?
When the shipment arrives, the importer needs to be present there with the relevant papers of the shipment as quickly he can. The papers will be handed over to the United States Customs and Border Control team. From there the shipment needs to be moved by the importer within 15days.
If the importer fails to do so, then it will be moved to the storage house of the customs and the importer needs to pay the storage cost as well. If the shipment stays in storage for 6 months, the shipment will be sold at auction.
To clear up the fees and take the shipment, the importer needs the following papers:
- Bill of lading: This valuable paper ensures that the exporter has obtained the invoice and the importer has received his imported goods. It is the receiving by the carrier of the shipping of the cargo.
- Commercial invoice: This invoice is a collection, which includes all the specifications of the goods and distribution. CBP receives the custom charges based on this paper. The paper includes the following:
- Product description
- Destination address in the US
- Country of origin
- Name and address company selling these products
- Value of goods in both currencies
- Tariff classification
- Packing list: The packing list includes all materials on the invoice along with their packaging details. When searching the package, the customs officials use this list to ease up the process.
- Arrival notice: As the name suggests, it is a notice of the arrival of your goods provided by the freight company upon the arrival of the shipment.
- Surety bond: It is like a contract of the importer with the customs authority. Any US security firm can buy these bonds. You can employ a customs broker for the same, as well. Surety bonds ensure that charges like customs tariffs, import fees, fines, etc., are clear to both parties.
- Two types of customs bonds: Custom bonds are another type of contract. Two types of customs bonds are usually found.
- One is the annual bond. As the name suggests, these bonds last for one year, which can be used for all imports during this period. This general import tax payment makes it a desirable option for importers. For a bond covering $50,000 USD, you will have to spend $400-$450. In case you want cheaper bonds to be extended, you can still purchase the larger one.
- The other type of customs bond is the single entry bond. If you are such an importer who imports several shipments a year, let’s say 5-10 each year, you will find the single entry bond pretty useful. It would save 5% of your shipment cost. It is said to be affecting the import duty from China to the
As you can see, there is a payment system that you can follow. Based on your business category, time of shipment across the year, loads of the shipments, the value of the products, and so on, you can choose the best option for you and pay accordingly.
How to Avoid Tax or Pay Less?
Tax is an extra burden for the importers. Tax plays a very important role in case of increasing the price of a product. Hence, to gain more customers by selling products at a relatively low price, all the importers want to get rid of the tax, or at least they want to reduce it to a significant amount.
A crucial fact about the tax is, it doesn’t depend on the size of the product, nor, upon the quantity of the product. For example, the Tax on a fridge will be lower than the tax on a phone. However, there are many ways how importers can avoid the tax or even can get rid of the tax fully.
Ways to Avoid Tax
- Prominent ways by which importers can avoid the tax fully:
- Personal exemption: In the year 2016, the personal exemption was increased from 200 dollars to 800 dollars by Obama President.
It was a huge relief for the importers who travel frequently from China to the United States and carry goods on a small amount. These 800 Dollars products, need to be carried by the importer at the same time by the same ticket.
But we need to remember here that, there are some products which are not under this duty-free section. If the fair retail value crosses 5 dollars, then the importer needs to pay money for an alcoholic beverage, alcoholic perfume, nicotinic substances.
Again, many other products are part of the tariff quota, for them, taxation is a must. If a person under-reports his/her product’s price, and the actual price is suspected by the customs to be higher than 800 dollars then the importer will be under taxation after evaluation by the customs.
- Sample: Any importer contacts a supplier before starting a business. The importer must show his/her products to the buyers so that they can understand the interest of the products within the buyers.
Again, the importer can also assure the customers of the quality of the products by showing them the product. To do any, the importer needs samples. These samples are provided by the supplier.
Samples are out of taxation. But there is a condition here. For any sample to be out of taxation it must be mentioned by the supplier that, it is for non-commercial purposes.
Again, the valuation of the sample should be of token costs less or equivalent of 1 dollar. If somehow, it is not written on the sample that it is out of commercial use or the token costs more than 1 dollar, if the product falls under taxation, the importer may need to give tax for it.
- Drop-shipping: Here the business is conducted by a third party. This third party works as a transferor. They contact the seller and manufacturer and then ship the product from the manufacturer to the seller. This is a perfect example of supply chain management.
The products are delivered to the seller as ePackets as well as Chain Postal Parcel. But this process is not fully out of taxation. Tax is needed to be paid. But the tax is paid by the seller. The third party who is doing the drop-shipping does not need to pay any tax.
The drop-shipping company can get a commission from the seller or manufacturer as their payment. The ePackets cannot be of more than 2 kilograms. Moreover, if the damage to the product is done by a third party, then they may have to pay damage compensation of around 6000yen.
Ways to reduce Tax
3 ways to reduce Tax are:
- Lowering the product value in the commercial invoice: Customs charges are made by the declared value of the products in the commercial invoice. An understanding can be made between the suppliers and the importers.
If the importers write down the price of the products less than the importers may gain the extra benefit of bearing less Tax. However, there is a risk associated with this. If the customs find out the price was lowered intentionally, then punitive tariff. Customs can even destroy the products or hold the products.
- Separating the delivery into more than one batch by international mails: If the product to be imported costs more than 2500 dollars it needs a formal entry. The importer can ask the supplier to divide the orders into the order of fewer than 800 dollars. However, if the true intention of reducing Tax is found out by the customs, then the importer will be in trouble and will fall under regulatory actions.
- Through intermediate trade or entrepot trade: The tax for products to be exported from Chain to the United States there is an extra pressure of bearing a Tax of near around 25%. But this is lesser when the transition occurs between some other country and the United States.
Therefore, by taking the extra burden of the transition cost, importers can mention an intermediate country as the origin of the products. Suppose the importers can take the products to Taiwan from Chain and then finally import it as Taiwan product to the USA.
Hong Kong to US Import Tax
Hong Kong is a duty-free country. Here, no tax is collected in terms of exporting the products. However, importers need to pay money when they import special items such as Liquor, tobacco, hydrocarbon oil, methyl alcohol.
All the liquor does not have the same type of charge. If the liquor has a strength of more than 30% then the rate of tax will be 100% except for wine if the alcoholic strength is less than 30% then the charges will be 0%, for wine as well the charges will be 0%. For 1000 cigarettes you need to pay a tax of around 1900 dollars and each cigarette cannot be longer than 90mm.
Again for various types of oils, the charges are different.
If you are looking for the perfect sourcing agent who can help you determine the rates and calculate the import tax from China to the USA, HunterSourcing may be the right spot for you.
The company aims to import items from China quickly, easily, and safely. The firm is dominating the sourcing sector in China by delivering one-stop sourcing services.
HunterSourcing as a China sourcing agent will help clients check the tariffs from China to the United States and the following things.
1. Products Sourcing
It’s difficult to get the best goods from a trustworthy provider at a reasonable price. HunterSourcing, on the other hand, has simplified the process. The company assigns an expert sourcing agent, who serves the customer all the way. To begin, the agent selects more than ten firms that sell the product you want. Then, they remove the ones that don’t meet your standards in terms of quality, pricing, and delivery choices after evaluating your needs. Based on this evaluation, the agent finally comes up with a limited number of companies, usually at least three.
2. Import & Export Consulting
Different products have different export policies, required paperwork, tariffs, and so on. Companies also have some requirements of their own. Besides, taxes and necessary documents vary from country to country. HunterSourcing gives this information to importers for free, easing them of related concerns.
3. Samples Collection & Quality Inspection
Ensuring the quality of your product is the ultimate need. The HunterSourcing agent will allow the shortlisted firms to provide samples of their product with your trademark, logo, and other branding applied, as per your specifications. The agent will then help you inspect the quality, making sure you get the best product.
4. Factory Audit
A factory’s quality isn’t only based on its samples. You must also ensure that they are capable of delivering the exact amount of product you want while maintaining excellent quality standards for all. Delivery time is also important in this regard. HunterSourcing will make sure of that.
5. Price & MOQ Negotiation
When it comes to wholesale, the pricing and minimum order quantity (MOQ) are important. Only a competitive price can ensure that you survive the market well and get some advantages. Similarly, MOQ will help you evaluate the market through these testing products. The HunterSourcing agent will assist you in locating the best pricing and MOQ from a variety of suppliers, resulting in the best choice.
6. Order Follow-up
From finding the ideal provider to receiving the product, the entire process necessitates follow-up, which is one of the most difficult tasks to complete. There are so many production details and so many more steps in the whole process that take up 15-60 days. The HunterSourcing agent will deal with all these steps while ensuring that you do not encounter any problems from the production process to shipment.
7. Quality Inspection
HunterSourcing does not limit its quality inspection to samples only. Throughout the production process, the designated agent inspects the quality. Even after the production is completed, a professional QC inspects the product and issue relevant inspection reports.
8. Free Warehousing (60 days)
HunterSourcing offers warehousing services as well. With its 1000-square-meter warehouse, they give consumers 60 days of free storage. As a consequence, you will be able to collect your products from various factories at one location. After 60 days, you will be charged, but that too, quite low.
9. Goods Consolidation
HunterSourcing offers goods consolidation, providing some extra advantages, like faster transport, lower transport costs, and so on.
10. Amazon FBA Service
One-stop supply chain solutions are constantly taken by global Amazon buyers. HunterSourcing offers Amazon FBA services, resulting in one-stop supply chain solutions. Simply reach HunterSourcing, and they will provide you with all of the necessary details on your order.
11. Low-cost shipping door to door Solution
Shipment is an extreme challenge for wholesaling. HunterSourcing, on the other hand, has relationships with a wide range of shipping companies, including several airlines that provide air freight services, express companies, railway freight companies, and so on. HunterSourcing offers door-to-door, door-to-port, port-to-door, port-to-port services.
12. Products Photography
HunterSourcing additionally assists wholesalers with product photography. The company provides the customers with three white background pictures of each product. These images can be used to advertise on Amazon. What’s even better is that it’s completely free.
Based on the services HunterSourcing offers, you can easily trust the company to calculate and process your import tax from China to USA.
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