Online duty calculators give you a number in three clicks. The number is usually wrong, not because the tool is bad but because the inputs are. Duty depends on a classification you have to get right, a customs value that is defined by law rather than by your invoice total, and a set of federal fees that apply on top. Here is the whole calculation, in order.
Step 1: classify the goods
Duty rates attach to a ten digit Harmonized Tariff Schedule number, not to a product name. Two similar articles can carry very different rates, and apparel is the classic case, which is why we wrote a separate guide on HS codes for clothing and textiles.
Until the classification is settled, everything downstream is a guess.
Step 2: establish the customs value
The primary basis is transaction value: the price actually paid or payable for the goods when sold for export to the United States. What sits inside that figure is where importers slip.
| Included in customs value | Excluded when separately identified |
|---|---|
| Price paid for the goods | International freight to the US port |
| Packing costs incurred by the buyer | Insurance on the international leg |
| Selling commissions paid by the buyer | US inland freight after arrival |
| Assists, royalties and licence fees tied to the goods | Duties and federal taxes |
The United States values imports on an FOB basis, so ocean freight and insurance stay out of the dutiable value when they are shown separately. Many importers pay duty on a CIF total out of habit and overpay on every entry.
Step 3: apply the duty rate
Rates come in three shapes, and the freight glossary defines each of them. Ad valorem is a percentage of the customs value. Specific is an amount per unit, per kilo or per litre. Compound combines both. Additional tariff actions, where they apply to your origin and classification, stack on top of the base rate rather than replacing it.
Step 4: add the federal fees
Two fees apply to most formal ocean entries.
- Merchandise Processing Fee, charged ad valorem with a minimum and a maximum per entry. The rate and the floor and ceiling are set by CBP and adjusted for inflation, so confirm the current figures before you model a year of imports.
- Harbor Maintenance Fee, charged on the value of cargo arriving by vessel. It applies to ocean shipments and not to air.
A worked example
Take a shipment of woven cotton shirts sold at 40,000 dollars FOB, with 3,200 dollars of ocean freight and 250 dollars of marine insurance shown separately on the invoice.
- Customs value: 40,000 dollars. Freight and insurance are separately identified and stay out.
- Duty at the rate for the classification, say 16.5 percent: 6,600 dollars.
- Merchandise Processing Fee at the current ad valorem rate applied to 40,000 dollars, subject to the per entry minimum and maximum.
- Harbor Maintenance Fee at 0.125 percent of 40,000 dollars: 50 dollars.
- Total landed cost adds duty and fees to the goods, the freight, the insurance, terminal charges and delivery.
Change the classification by one heading and the 6,600 dollars moves by thousands. That is why classification, not the calculator, is where the effort belongs.
What calculators cannot see
They cannot see whether a trade agreement applies, and preference usually depends on rules of origin that look past the country of assembly. They cannot see antidumping or countervailing duty orders, which are product and producer specific and can exceed the value of the goods. They cannot see quota, licensing or partner government agency requirements. And they cannot see whether your invoice contains assists or royalties that belong in the value.
A broker checks all of that on the entry. Getting the same answers before you commit to a purchase order is cheaper.
Where the freight side touches the duty side
The commodity data on your entry has to agree with the manifest data your carrier filed, or the container waits. The connection runs through the AMS filing and the importer's own ISF. Keep the descriptions and classifications consistent across all three and clearance is uneventful.
FAQ
How do I calculate customs duty in the US?
Classify the goods to a ten digit HTS number, establish the customs value on an FOB basis, apply the duty rate to that value, then add the Merchandise Processing Fee and, for ocean cargo, the Harbor Maintenance Fee.
Is duty charged on shipping costs?
Not when international freight and insurance are separately identified on the commercial invoice. The United States values imports on an FOB basis.
What is the Merchandise Processing Fee?
A CBP fee charged as a percentage of the customs value on formal entries, with a per entry minimum and maximum. Confirm the current rate, since it is adjusted periodically.
Do I pay duty on samples?
Often yes. Value them realistically. Marking a shipment "no commercial value" does not remove the obligation and invites scrutiny.
Who pays the duty?
The importer of record. The Incoterm you agreed decides who is contractually responsible, but CBP looks to the importer of record on the entry.
Want the landed cost worked out before you buy? Send us the invoice and the lane and we will price the freight and flag the customs questions.