Volume 1 – Introduction & Duty

Over the last few weeks, I have had conversations with people that are unaware of what goes into getting the merchandise they purchase in stores into the country and on the shelves. Over my 30 years in the international logistics industry, it is something I just take for granted. Yet 30 years ago when I started in this industry, I can tell you, I had no clue either. I knew nothing of this industry. Heck, I didn’t even give how merchandise got to the shelves a thought, I just took it for granted.

Although I would not call myself an expert in regulations today – as processes are always changing (I think to ensure nobody is an expert). I’ve been doing this long enough that on those occasions where I don’t lose the listener in the first 2 minutes it is not uncommon for the conversation to turn into a test of the person’s focus and listening skills; because I find myself rambling, going in too many directions at once and not providing clear information. Therefore, I am going to start a series of blogs to explain the facets of import logistics one step/feature/key process at a time?

Aerial Top View Of Industrial Cargo Container Ship In Termina

Duty

What it is & How it is Determined

The importing of product begins with research. The first thing that should be researched is what the product is that you’re importing and what the cost will be to import your product. A component of the cost is the duty that will be assessed to the goods that are imported into the U.S.

There is a book U.S. Customs uses called a Harmonized Tariff Schedule. This book is about 2 feet thick and lists just about every product you can think of. If the product being imported is not in the tariff book, then the Importer of Record (IOR) needs to get a “Binding Ruling” but that is a discussion for another blog. Every product being imported into the U.S. is assigned a 10-digit Harmonized Tariff Code. The determination of the code can be/is very precise. The example I use is a screw. The tariff code used for a screw is determined by the thread, length, composite and type of head. Each code is assigned a duty rate. The duty rate varies per product and determines how duty (tax) must be paid to U.S. Customs for the importation of the product. The reason a company should research this first is to determine if, after paying duty, it is still beneficial to import the product into the U.S.

The duty rate or potential additional duty can also be based on the Country of Origin. Also, there may be additional duty referred to as “anti-dumping” that can be assessed to certain product based on the Country of Origin of the product. “Anti-Dumping” is assessed by the U.S. government when it is determined that a certain product is being sold well below market value out of a certain country. The anti-dumping fee can be very high. Therefore, determining the country of origin a company plans to import from can be very important as well.

Experts in the Field

There are individuals that have studied and tested to become a Licensed Customs Broker. People who have obtained this license have spent endless hours studying, taken classes, been involved in study groups and taken the “Brokers Exam”. The “Brokers Exam” has been compared to the “Bar Exam” and usually takes about 4 hours to complete. On average, only around 3% of those taking the Brokers Exam pass. U.S. Customs and the import regulations are a very technical aspect of the importing process. Any company importing into the U.S. should be aware that they are “Ultimately Responsible for the Importation of Their Product” according to the 1993 Mod Act, an edit to the Customs Regulation. This is a very important regulation for all companies importing into the U.S.!!!

Stay tuned for our next blog in the series: Volume 2 – Determining the Mode