Import tariffs work by applying a duty rate to an incoming shipment based on three things: what the product is, what it’s worth (or how much of it there is), and where it was made. U.S. Customs and Border Protection collects the duty from the importer of record when the goods enter the country, and in 2026 that duty is usually the sum of several layers: the standard rate from the Harmonized Tariff Schedule plus any additional tariffs the President has imposed on that product or that country.
The Three Ways a Duty Rate Is Structured
Before you can calculate anything, you need to know which of three formats the rate uses.
An ad valorem rate is a percentage of the shipment’s appraised value. A 5% duty on a $100,000 shipment produces a $5,000 obligation. This is the most common format because the duty moves with the price of the goods.1European Commission. Access2Markets – Ad Valorem Duty
A specific rate is a flat charge per physical unit — $0.50 per kilogram, $10 per barrel — regardless of price. These are easier to administer and show up most often on bulk commodities and agricultural goods.
A compound rate combines both. You might owe $0.05 per unit plus 2.5% of value on the same entry.
The Three Inputs That Produce the Dollar Amount
Every duty calculation depends on classifying the product, valuing it, and identifying its origin. Getting any of these wrong changes what you owe, and errors invite penalties.
Classification
Every imported item is assigned a ten-digit HTS code from the Harmonized Tariff Schedule of the United States.2U.S. International Trade Commission. Harmonized Tariff Schedule That code determines the rate. Classification follows the General Rules of Interpretation, a six-step hierarchy starting with the plain wording of the HTS headings and moving to more specific rules for items that don’t fit cleanly. Mixtures, incomplete goods, items that arguably fit two headings, and even packaging have their own rules.
The stakes are real. A product classified one way might carry a 2% duty; the same product classified slightly differently could trigger 25%. This is where experienced customs brokers earn their fees.
Valuation
For ad valorem duties, you need a value to apply the percentage to. Federal law sets a hierarchy of six methods, and you must use the first one that applies.3Office 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’s rarely just the invoice figure. 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 provided to the foreign manufacturer. Assists include tools, molds, dies, engineering work, and raw materials the U.S. buyer supplied to the overseas factory for free or at a discount.4eCFR. 19 CFR 152.102 – Definitions Forgetting to declare assists is one of the most common valuation errors and a frequent audit trigger.
If transaction value doesn’t work — for example, when the buyer and seller are related and the relationship influenced the price — CBP works down the list: transaction value of identical merchandise, then similar merchandise, then deductive value (U.S. resale price minus post-importation costs), then computed value (production costs in the country of manufacture), then a fallback method.
Country of Origin
Where the goods were manufactured (or “substantially transformed”) determines which column of the HTSUS applies. Column 1 holds the standard “most-favored-nation” rates that cover the vast majority of trading partners, with a “Special” subcolumn listing reduced or zero rates for free trade agreement partners. Column 2 holds much higher rates for the small number of countries without normal trade relations, including Cuba and North Korea.
The same HTS code can produce dramatically different duties depending on origin. Rules of origin get technical when raw materials from one country are assembled in another; whether the assembly was a substantial transformation into a new article decides the answer. The importer certifies origin, and false claims carry serious penalties.
The Layered Tariffs Sitting on Top of the HTSUS
The HTSUS rate is the starting point, not the whole story. Congress has the constitutional authority to lay and collect duties5Congress.gov. Constitution Annotated – Article I Section 8 but has delegated broad authority to the President through several trade laws. Recent years have seen heavy use of that delegated authority, and the tariffs stack.
- Section 201 safeguard tariffs under the Trade Act of 1974 let the President impose temporary duties or quotas when the U.S. International Trade Commission finds that an import surge is seriously injuring a domestic industry.6U.S. International Trade Commission. Understanding Section 201 Safeguard Investigations
- Section 232 national security tariffs under the Trade Expansion Act of 1962 allow the President to restrict imports that threaten national security. Steel and aluminum tariffs imposed in 2018 were expanded to additional derivative products in 2025.7Bureau of Industry and Security. Section 232 Steel and Aluminum
- Section 301 unfair trade practice tariffs respond to foreign policies the U.S. Trade Representative finds unjustifiable or unreasonable. As of 2026, Section 301 duties on Chinese goods range from 25% to 100% depending on the product category.8Congress.gov. Section 301 of the Trade Act of 1974
- IEEPA emergency tariffs were used starting in 2025 to impose duties by declaring national emergencies tied to trade deficits, border security, and drug trafficking. This includes a baseline 10% reciprocal tariff on all imports, higher country-specific rates for many partners, and 25% duties on Canadian and Mexican goods that don’t qualify under USMCA.9Federal Register. Regulating Imports With a Reciprocal Tariff To Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits
A single shipment of Chinese steel could face the standard HTSUS rate, a Section 301 tariff, a Section 232 tariff, and a reciprocal IEEPA tariff at the same time. Each is imposed under separate legal authority and calculated independently, then added together.
Fees You Owe on Top of the Duty
The duty is not the only line item. CBP collects processing 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 is 0.125% of the cargo’s value on commercial shipments arriving by vessel.11eCFR. 19 CFR 24.24 – Harbor Maintenance Fee Air and overland shipments don’t pay it.
Both fees are calculated and paid alongside the duties on the entry summary.
How and When You Pay CBP
The importer of record, usually working through a licensed customs broker, files the paperwork and pays. Before importing, that party also needs a customs bond in place, which guarantees payment of duties, taxes, and fees. Single-entry bonds cover one shipment; continuous bonds cover a 12-month period and are sized to expected duty volume.
When goods arrive at a U.S. port, the importer files entry documents to release the merchandise. 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, appraised value, country of origin, and calculated duty.13eCFR. 19 CFR Part 142 Subpart B – Entry Summary Documentation
That deposit is only an estimate. CBP later performs liquidation, the final official determination of classification, value, and duty.14GovInfo. 19 USC 1500 – Appraisement, Classification, and Liquidation Procedures If you underpaid, CBP bills the difference. If you overpaid, you get a refund. Liquidation often happens months after release, and CBP can adjust something the importer thought was settled.
If you disagree with the liquidation, you have 180 days from the liquidation date to file a formal protest challenging the classification, valuation, origin, or rate.15Office of the Law Revision Counsel. 19 USC 1514 – Protest Against Decisions of Customs Service Denied protests can be escalated to the U.S. Court of International Trade. Miss the 180 days and you lose the right to contest that entry.
The $800 De Minimis Exemption Is Gone
For years, shipments valued at $800 or less could enter duty-free under the de minimis rule in 19 U.S.C. § 1321.16Office of the Law Revision Counsel. 19 USC 1321 – Administrative Exemptions E-commerce platforms shipping directly from overseas warehouses relied on it heavily.
That treatment has been suspended. Executive orders in 2025 eliminated duty-free de minimis for commercial shipments regardless of value, country of origin, or entry method.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 effect is that every commercial package from abroad now incurs tariff obligations.
Penalties for Getting It Wrong
Customs violations carry civil penalties that scale with intent.18Office of the Law Revision Counsel. 19 USC 1592 – Penalties for Fraud, Gross Negligence, and Negligence
- Fraud means intentionally entering goods with false information. The maximum penalty is the full domestic value of the merchandise.
- Gross negligence means reckless disregard for accuracy. The penalty caps at the lesser of domestic value or four times the unpaid duties. Where duties weren’t affected, the cap is 40% of the dutiable value.
- Negligence means failure to exercise reasonable care. The penalty caps at the lesser of domestic value or two times the unpaid duties. Where duties weren’t affected, the cap is 20% of the dutiable value.
The government has five years from the date of a violation to bring an enforcement action, or five years from discovery of fraud where the violation was fraudulent.19Office of the Law Revision Counsel. 19 USC 1621 – Limitation of Actions “Reasonable care” is the standard CBP applies during audits. Thorough records of how you classified, valued, and determined origin are the best defense.
Who Actually Bears the Cost
The importer of record writes the check, but that doesn’t mean the importer absorbs the cost. A tariff’s economic burden can land on three parties: domestic consumers through higher retail prices, domestic importers through thinner margins, or foreign exporters through lower selling prices to hold market share. In practice the burden gets split, and the party with the fewest alternatives shoulders the largest share.
Recent research has consistently found that U.S. buyers absorb the vast majority. 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 result matches earlier studies of the 2018 tariff rounds, which found nearly complete pass-through to U.S. prices. If you’re importing, plan on a tariff increase raising your landed cost by roughly the full amount of the duty.