Do You Know about Import Duties for Sourcing from China?

As the world’s largest manufacturing hub, China has become the go-to destination for businesses looking to source products at a competitive price. However, when sourcing from China, one of the biggest considerations that businesses often overlook is the import duties they need to pay. In this blog post, we will discuss what import duties are and why they matter when sourcing from China.

1.What is Import Tariff?

Import duties are taxes imposed by a government on goods imported into a country. These duties are typically charged as a percentage of the value of the goods being sourcing from China and are designed to protect local industries and generate revenue for the government. When sourcing from China, the importer is responsible for paying the import duties, which can add significant costs to the final price of the goods.The purpose of import tariffs can vary depending on the country’s economic policies.

Some countries use import tariffs to protect their domestic industries from foreign competition by making imported goods more expensive. This protectionism helps to create jobs and support local businesses, but it can also lead to higher prices for consumers and limit access to foreign goods. Other countries may use import tariffs as a means of generating revenue for the government. By placing a tax on imported goods, the government can collect money that can be used to fund public services or reduce the budget deficit. Overall, import tariffs can have significant impacts on global trade and economic relations between countries.

2. The Amount of Import Tax Depends On the Type of Product Being Imported.

The amount of import duty you need to pay depends on the type of product you are sourcing from China, its value, and the country of origin. In China, the general import duty rate is 7.5%, but this can vary depending on the product. For example, the import duty on textiles can be as high as 30%, while the duty on electronics can be as low as 0%. In addition to import duties, there may be other taxes and fees that need to be paid, such as value-added tax (VAT) and excise duty.

3. Online Tools—Harmonized Tariff Schedule

To determine the total cost of sourcing from China, you need to consider not just the price of the goods but also the shipping costs, insurance, and any additional taxes or fees. It is also important to factor in any customs clearance charges that may be incurred, such as broker fees, handling charges, and storage fees.

Harmonized Tariff Schedule (HTS) is an international standard used to classify and calculate tariffs and trade data for goods. In the United States, HTS is issued by the United States International Trade Commission (USITC) and executed by the Customs and Border Protection Agency (CBP). Using HTS, you can determine the tariff rates for specific products and whether they need to comply with specific trade requirements.

Here are some basic steps for using HTS:

A.Determine what products you sourcing from China. HTS classifies products based on their specific characteristics, including materials, uses, and manufacturing methods.

B.Use the HTS brochure or the HTS online search tool to find the categories and subcategories most relevant to your product. Each category has a specific product number.

C.Find the tariff rates for each category. The tariff rate in the United States is usually a percentage applied to the value of imported goods. Tax rates may vary depending on product type and country.

D.Determine if you need to comply with other trade requirements, such as quotas, restrictions, or anti-dumping measures. These regulations may affect your trade plan, so special attention needs to be paid.

E.Consult a customs broker or professional lawyer for more detailed advice and guidance.

It should be noted that HTS is only a reference tool, and your actual tariff rates may vary depending on the characteristics of the goods and changes in the trade policies of the destination country. Therefore, it is essential to conduct comprehensive research and consultation before conducting any actual trade activities.

4. What Type of Goods Are Not Subject to Import Duty?

As we mentioned before, goods valued at $800 or less are not subject to import duties, including import taxes. In addition, many products made from natural materials are exempt from duty, but you must check on a case-by-case basis. In order to avoid import duties, many people try to split their orders into several smaller orders. Although this is usually overlooked, it is risky and may incur penalties. 

These are small quantities of goods that are imported for demonstration or testing purposes, such as product samples or prototypes.  In addition, you can talk to your supplier in advance and put a label on the sample package that says “Sample of no commercial value”. Putting this on your samples will let customs know that you do not intend to resell these products.

To avoid any surprises when sourcing from China, it is important to research the import duties and taxes that apply to your products before placing an order. You can consult with a customs broker or freight forwarder who can provide you with an estimate of the import duties and other costs you can expect to pay. Additionally, you can use online tools such as the Harmonized Tariff Schedule (HTS) to find the correct tariff classification for your product and determine the applicable duty rate.

In conclusion, when sourcing from China, import duties are an important consideration that should not be overlooked. Understanding the duty rates and other costs associated with sourcing from China will help you make informed decisions about pricing and shipping and avoid any unexpected costs. By doing your research and working with experienced customs brokers or freight forwarders, you can ensure a smooth and cost-effective import process.

If paying import duties is too complicated for you, try contacting a customs broker, asking your carrier or contacting us directly. Toptrade sourcing has a complete supply chain and we will take care of your entire supply import process so you can focus on driving sales. With our help, sourcing from China is not difficult.