Import tariffs work by applying a government charge to goods brought into the United States, calculated from three inputs: how the product is classified under the tariff schedule, what it’s worth or how much of it there is, and where it was made. U.S. Customs and Border Protection (CBP) collects the money when the shipment enters the country, and the importer of record is the party legally responsible for filing the entry paperwork and depositing the duties owed. What used to be a fairly stable calculation has become layered and volatile, because recent presidential tariff actions now stack on top of the baseline rates Congress set.
The Three Shapes a Tariff Can Take
Before the math, the structure. A tariff is written in one of three forms, and the form controls how your bill is calculated.
An ad valorem tariff is a percentage of the goods’ appraised value. A 5% duty on a $100,000 shipment produces a $5,000 obligation.1European Commission. Access2Markets – Ad Valorem Duty This is the most common form in the U.S. schedule because the duty moves automatically with price.
A specific tariff is a flat charge per physical unit, such as $0.50 per kilogram or $10 per barrel, regardless of what the item sells for. It’s simple to administer but erodes over time as inflation outruns the fixed amount. Specific duties appear most often on bulk commodities and agricultural goods.
A compound tariff combines the two: a per-unit charge plus a percentage of value. The per-unit floor protects against cheap imports while the percentage keeps the duty proportional on higher-priced goods.
Who Sets the Rate
The Constitution puts the power to lay duties and regulate foreign commerce in Congress.2Congress.gov. Constitution Annotated – Article I Section 8 Congress has delegated large pieces of that authority to the President, so the rate on any given shipment can come from more than one place.
The Baseline Schedule
The starting point is the Harmonized Tariff Schedule of the United States (HTSUS), which assigns a duty rate to nearly every product that can be imported.3U.S. International Trade Commission. Harmonized Tariff Schedule Column 1 holds the standard most-favored-nation rates that apply to most trading partners, with a “Special” subcolumn listing reduced or zero rates for countries covered by free trade agreements or preference programs. Column 2 holds much higher rates reserved for a short list of countries without normal trade relations, including Cuba and North Korea.
Presidential Tariff Layers
On top of the HTSUS, the President can add tariffs under several laws. These layers are where the recent volatility has come from, and they stack: a single shipment can be hit by the HTSUS rate plus one or more of the following, each calculated independently.
- Section 201 safeguard tariffs under the Trade Act of 1974, available when the U.S. International Trade Commission finds that an import surge is seriously injuring a domestic industry.4U.S. International Trade Commission. Understanding Section 201 Safeguard Investigations
- Section 232 national security tariffs under the Trade Expansion Act of 1962, used on steel and aluminum beginning in 2018 and expanded to additional derivative products in 2025.5Bureau of Industry and Security. Section 232 Steel and Aluminum
- Section 301 tariffs on unfair trade practices, most prominently the duties on Chinese goods, which as of 2026 range from 25% to 100% depending on the product.6Congress.gov. Section 301 of the Trade Act of 1974
- IEEPA tariffs under the International Emergency Economic Powers Act, used starting in 2025 to impose a 10% baseline reciprocal tariff on all imports with higher country-specific rates, plus 25% duties on Canadian and Mexican goods that don’t qualify under USMCA.7Federal Register. Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits
A shipment of Chinese steel can carry the HTSUS duty, a Section 301 tariff, a Section 232 tariff, and an IEEPA reciprocal tariff all at once.
How the Dollar Amount Is Calculated
Three determinations drive the number: what the product is, what it’s worth, and where it was made. Each has its own rules, and each is a common source of error.
Classification
Every item gets a ten-digit HTS code, and that code dictates the rate. Classification follows the General Rules of Interpretation, a six-step hierarchy that starts with the plain wording of the HTS headings and works through more specific rules for mixtures, incomplete goods, items that could fit under two headings, and packaging.3U.S. International Trade Commission. Harmonized Tariff Schedule The stakes are real. One classification might carry a 2% duty while a neighboring one triggers 25% on effectively the same item. This is why experienced customs brokers exist.
Value
For ad valorem duties, you need a dollar figure to apply the percentage to. Federal law establishes a hierarchy of six valuation methods, and you must use the first one that works.8Office of the Law Revision Counsel. 19 USC 1401a – Value
The primary method is transaction value: the price actually paid or payable for the goods when sold for export to the United States. That isn’t always the simple invoice total. The law requires adding packing costs paid by the buyer, selling commissions, royalties or license fees tied to the goods, and the value of any “assists” the buyer supplied to the foreign manufacturer. Assists include tools, molds, dies, engineering work, or raw materials the U.S. buyer provided to the overseas factory for free or at a discount.9eCFR. 19 CFR 152.102 – Definitions Failing to declare assists is one of the most common valuation errors and a frequent audit trigger. If transaction value doesn’t apply, CBP moves down the list through identical merchandise, similar merchandise, deductive value, computed value, and a fallback method.
Country of Origin
Where the goods were manufactured, or “substantially transformed,” controls which column of rates applies and whether any preferential program is available. The same product under the same HTS code can carry very different duties depending on origin: duty-free from a free trade partner, several times the Column 1 rate from a non-NTR country. When raw materials from one country are assembled in another, origin turns on whether the assembly produced a new article. Importers must certify origin to claim preferential treatment, and false origin claims carry serious penalties.
Fees Added On Top of the Duty
The tariff isn’t the whole bill. CBP collects additional fees on most formal entries.
The Merchandise Processing Fee for fiscal year 2026 is 0.3464% of the goods’ value, with a minimum of $33.58 and a maximum of $651.50 per entry. A manual filing adds a $4.03 surcharge.10U.S. Customs and Border Protection. Customs User Fee – Merchandise Processing Fees
The Harbor Maintenance Fee applies to commercial cargo arriving by vessel at 0.125% of cargo value.11eCFR. 19 CFR 24.24 – Harbor Maintenance Fee Air cargo and overland shipments don’t pay it.
Both fees are calculated and paid alongside the duties on the entry summary.
How CBP Collects the Money
The importer of record, usually acting through a licensed customs broker, handles the paperwork and the payment. The process runs in two stages: get the goods released, then settle the final numbers.
Entry and Deposit
When goods arrive at a U.S. port, the importer files entry documents to get them released. Within 10 working days of release, the importer files the entry summary on CBP Form 7501 (or its electronic equivalent) and deposits the estimated duties, taxes, and fees.12U.S. Customs and Border Protection. Entry Summary and Post Release Processes The entry summary declares the HTS classification, the appraised value, the country of origin, and the duty amount.13eCFR. 19 CFR Part 142 Subpart B – Entry Summary Documentation Importers must also have a customs bond in place before importing. A single-entry bond covers one shipment; a continuous bond covers 12 months of shipments.
Liquidation
The deposit is an estimate. CBP later reviews the entry and performs “liquidation,” the final official determination of classification, value, and duty.14GovInfo. 19 USC 1500 – Appraisement, Classification, and Liquidation Procedures If the importer underpaid, CBP bills for the difference; if the importer overpaid, a refund is issued. Liquidation can occur months after release, and CBP sometimes adjusts a classification or value the importer thought was settled.
Disputing a Decision
If you disagree with liquidation, you have 180 days from the liquidation date to file a formal protest challenging the classification, value, origin, or rate.15Office of the Law Revision Counsel. 19 USC 1514 – Protest Against Decisions of Customs Service If CBP denies the protest, the importer can take the dispute to the U.S. Court of International Trade. Miss the 180-day window and the right to contest that entry is gone.
The $800 De Minimis Exemption Is Suspended
For years, commercial shipments valued at $800 or less entered duty-free under the de minimis rule in 19 U.S.C. ยง 1321.16Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions That treatment has been suspended. Executive orders beginning in 2025 eliminated duty-free de minimis for commercial shipments regardless of value, country of origin, or method of entry.17The White House. Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries International postal shipments have a temporary transitional arrangement, but the practical reality is that commercial packages from abroad now carry tariff obligations whatever their size.
Penalties for Getting It Wrong
Customs law separates honest mistakes from intentional cheating, and the penalty scales accordingly.18Office of the Law Revision Counsel. 19 USC 1592 – Penalties for Fraud, Gross Negligence, and Negligence
- Fraud, meaning intentionally entering goods with false information, is punishable up to the full domestic value of the merchandise.
- Gross negligence, a reckless disregard for accuracy, caps at the lesser of the domestic value or four times the unpaid duties, or at 40% of the dutiable value if duty wasn’t affected.
- Negligence, a failure to exercise reasonable care, caps at the lesser of the domestic value or two times the unpaid duties, or at 20% of the dutiable value if duty wasn’t affected.
The government has five years from the date of the violation to act, or five years from discovery in fraud cases.19Office of the Law Revision Counsel. 19 USC 1621 – Limitation of Actions “Reasonable care” is the standard CBP applies during audits, and thorough records of how you classified, valued, and traced the origin of your goods are the best defense against a negligence finding.
Who Actually Pays
The importer of record writes the check to CBP, but who absorbs the economic cost is a separate question. The burden can fall on domestic consumers through higher retail prices, on the importer through thinner margins, or on the foreign exporter through lower selling prices to protect market share. In practice, the cost splits across all three.
The split tracks how flexible each side is. If buyers will keep purchasing at almost any price, the importer passes the duty through and consumers bear it. If the foreign producer has few other markets and can’t easily cut output, the producer absorbs more by discounting to the U.S. buyer. The party with the fewest alternatives takes the largest share.
Studies of recent U.S. tariff rounds point the same direction. A Federal Reserve Bank of New York analysis of 2025 trade data found that American importers and consumers bore close to 90% of the tariff burden, with foreign exporters absorbing only a small fraction through lower prices. That tracks earlier research on the 2018 tariff rounds, which found nearly complete pass-through to U.S. prices. For anyone bringing goods into the country, the planning assumption is simple: a tariff increase will raise your landed cost by roughly the full amount of the duty.