Duties in shipping are taxes the U.S. government charges on goods brought into the country from abroad. U.S. Customs and Border Protection (CBP) collects them at the border, and the rate can run anywhere from zero to over 100 percent depending on what the product is, where it was made, and what trade policies are in effect at the time of import. The amount owed is calculated by multiplying a duty rate against the customs value of the shipment, and the legal responsibility to pay sits with the Importer of Record.
How Duty Amounts Are Calculated
Duties fall into three basic structures:
- Ad valorem duties are charged as a percentage of the product’s value. This is the most common form. A 10 percent duty on a $5,000 shipment produces a $500 charge.
- Specific duties are a fixed dollar amount tied to quantity or weight rather than value, such as a set rate per kilogram.
- Compound duties combine both, for example a per-unit charge plus a percentage of value.
On top of these standard rates, the U.S. can impose additional duties in trade disputes. Anti-dumping duties apply when a foreign manufacturer sells products in the U.S. below fair value in a way that injures or threatens a domestic industry.1Office of the Law Revision Counsel. 19 U.S. Code 1673 – Antidumping Duties Imposed Countervailing duties target goods that benefit from foreign government subsidies. Both are added on top of the normal tariff, and they can sharply raise the total cost of an import.
What the Rate Is Applied To
Two things drive the duty bill: how the product is classified and what value CBP assigns to it.
Tariff Classification
Every imported product gets a code that determines its duty rate. The foundation is the Harmonized System (HS), a global framework maintained by the World Customs Organization that sorts products into more than 5,000 categories, each identified by a six-digit code.2World Customs Organization. What Is the Harmonized System (HS)? More than 200 countries build their tariff schedules on it.
The U.S. adds four more digits to create the Harmonized Tariff Schedule (HTS), producing highly specific rates.3Office of the Law Revision Counsel. 19 USC 1202 – Harmonized Tariff Schedule Small classification differences can move the rate significantly. A garment made entirely of cotton may carry a different rate than a polyester blend that looks identical. Picking the wrong code can mean overpaying, or worse, a penalty for misdeclaration. If you are unsure how a product should be classified, you can ask CBP for a binding advance ruling before you ship, and CBP will tell you exactly how it will treat the merchandise on arrival.4U.S. Customs and Border Protection. Rulings and Legal Decisions
Customs Value
Once the classification is set, CBP needs a dollar figure to apply the rate against. The primary method under U.S. law is transaction value, which is the price you actually paid or agreed to pay for the goods when sold for export to the United States.5Office of the Law Revision Counsel. 19 U.S. Code 1401a – Value
The U.S. values goods on a free-on-board (FOB) basis. International shipping and insurance are not part of the dutiable value. The statute defines “price actually paid or payable” as exclusive of transportation, insurance, and related costs for the international leg. Many other countries use a Cost, Insurance, and Freight (CIF) basis that includes those charges, so the same shipment can have a different customs value in the U.S. than it does elsewhere.
Transaction value is not always limited to the invoice price. If you supply materials, tools, molds, or design work to the foreign manufacturer at no charge or below cost, the value of those “assists” must be added to the customs value.6eCFR. 19 CFR 152.102 – Definitions Royalty and license fees and selling commissions paid by the buyer are also added. Missing these adjustments is a common cause of underpayment and later penalties.
How Country of Origin Changes the Rate
Where a product was manufactured or substantially transformed decides which duty rate applies. The U.S. uses formal Rules of Origin that look at where raw materials were sourced, where the product was assembled, and whether processing changed the product’s tariff classification.7eCFR. 19 CFR Part 102 – Rules of Origin These rules keep companies from routing goods through a third country to claim a lower rate.
Trade agreements can reduce or eliminate duties on qualifying products. Under the United States-Mexico-Canada Agreement (USMCA) and similar deals, goods meeting the agreement’s origin requirements may enter at preferential rates, sometimes zero. Claiming a preferential rate usually requires a Certificate of Origin. Rates also shift with policy: Section 301 tariffs and other executive actions have raised duties significantly on goods from certain countries in recent years, so check the current rate before you ship.
Who Legally Owes the Duty
The Importer of Record is the person or entity legally responsible for paying all duties, taxes, and fees on a shipment. Federal law treats that liability as a personal debt owed to the United States. The Importer of Record must be the owner or purchaser of the goods, or an appropriately designated customs broker.8Office of the Law Revision Counsel. 19 USC 1484 – Entry of Merchandise
Private contracts between buyer and seller decide who absorbs the economic cost, but they do not change who CBP holds accountable. Two common arrangements show the difference:
- Delivered Duty Paid (DDP): The seller covers shipping, duties, and taxes. The buyer receives the goods with no additional charges.
- Delivered at Place (DAP): The seller delivers to the destination, but the buyer handles import duties and customs clearance.
Whichever arrangement is used, CBP will pursue the Importer of Record for any unpaid balance. Unresolved debts can lead to seizure of goods or suspension of importing privileges. Many importers hire a licensed customs broker to file the paperwork and calculate duties, but that requires a written power of attorney, and legal responsibility for accuracy and payment stays with the Importer of Record.9eCFR. 19 CFR 141.46 – Power of Attorney Retained by Customhouse Broker
The De Minimis Rule and Its Current Suspension
Federal law has long allowed shipments with a fair retail value of $800 or less per person per day to enter the U.S. duty-free under a rule known as the de minimis exemption.10Office of the Law Revision Counsel. 19 U.S. Code 1321 – Administrative Exemptions Some categories were always carved out regardless of value, including tobacco, alcoholic beverages, and goods subject to anti-dumping or countervailing duties.11Federal Register. Test Concerning Entry of Section 321 Low-Valued Shipments Through Automated Commercial Environment
As of February 2026, the de minimis exemption has been suspended for virtually all shipments entering the United States, regardless of value, country of origin, or shipping method. A presidential executive order requires shipments that previously qualified for duty-free entry to be filed through the formal entry process and to pay applicable duties, taxes, and fees.12The White House. Continuing the Suspension of Duty-Free De Minimis Treatment for All Countries If you are importing goods, including small personal purchases from overseas e-commerce sellers, plan on paying duties at the current applicable rate.
The Entry and Payment Sequence
Paying duties happens on a defined timeline with strict deadlines:
- File cargo release. Within 15 calendar days of the shipment’s arrival, you file entry documents so CBP can decide whether to release the merchandise.13U.S. Customs and Border Protection. Entry Summary and Post Release Processes
- File entry summary and deposit estimated duties. Within 10 working days after release, you file CBP Form 7501 and deposit your estimated duties.14Office of the Law Revision Counsel. 19 USC 1505 – Payment of Duties and Fees
- Liquidation. CBP reviews your entry and makes a final determination of duties owed. Entries are typically liquidated within one year of the entry date. If CBP has not acted within that year, the entry is automatically liquidated at the duty rate you declared. CBP can extend the period, but the absolute maximum is four years.15eCFR. 19 CFR Part 159 – Liquidation of Duties
If CBP’s final calculation differs from your estimated payment, you either receive a bill for the shortfall (due within 30 days) or a refund of the overpayment, with interest running in either direction.
Before goods can be released, most importers also need a customs bond, a financial guarantee that duties, taxes, and fees will be paid.16Office of the Law Revision Counsel. 19 USC 1623 – Bonds and Other Security Bonds come as single-entry (covering one shipment) or continuous (covering all shipments over 12 months). You buy the bond from a licensed surety company, not from CBP.
Penalties for Getting It Wrong
Federal law sets a tiered penalty system for customs violations under 19 U.S.C. ยง 1592, scaled to the level of fault:17Office of the Law Revision Counsel. 19 U.S. Code 1592 – Penalties for Fraud, Gross Negligence, and Negligence
- Negligence: Up to two times the duties the government lost, or up to 20 percent of the dutiable value if the error did not affect the duty amount.
- Gross negligence: Up to four times the lost duties, or up to 40 percent of the dutiable value for violations that did not affect duty amounts.
- Fraud: Up to the full domestic value of the merchandise, reserved for intentional deception.
The government has five years from the date of the violation to bring an enforcement action, or five years from the date fraud was discovered in fraud cases.18Office of the Law Revision Counsel. 19 U.S. Code 1621 – Limitation of Actions Accurate classification, valuation, and documentation up front costs far less than resolving a penalty after the fact.