How US import duty is calculated (with a worked example)

Ask five importers how duty is calculated and you'll get five half-answers, because the honest answer is "it depends on four or five things that each have their own rules." But the structure itself is completely learnable. Once you see the calculation laid out in order — value, classification, origin, then fees — you can work out the duty on almost anything, and spot when a supplier's landed-cost quote doesn't add up. This guide walks through every step, then runs two complete worked examples with every dollar itemised: a footwear shipment from China, and a consumer-electronics shipment from Vietnam.

The four inputs that decide your duty bill

Every import duty calculation, whatever the product, comes down to the same four inputs: what the goods are worth, how they're classified, where they came from, and which fees attach to the entry. Miss any one of these and the figure you're relying on is wrong. Work through them in order, though, and you end up with a number you can defend rather than a guess pulled from a supplier's invoice.

• Customs value — the dollar amount the duty percentage is applied against.
• HTS classification — the 10-digit code that sets the base (Column 1) rate.
• Country of origin — decides whether Section 301, Section 232 or other additional tariffs stack on top.
• Fees — MPF, and for ocean freight, HMF — charged regardless of what the duty rate itself comes out to.

Step 1 — establish the customs value

Duty is charged on the customs, or entered, value. This is normally the transaction value: the price actually paid or payable for the goods when sold for export to the United States. A few additions can apply on top of the invoice price, such as assists you supplied to the factory (moulds, tooling, design work) or certain royalties tied to the sale. Whether freight and insurance are included depends on your Incoterms — but for the ad valorem duty calculation itself, the value used is generally the FOB or ex-works price of the goods, not the CIF figure on a freight quote.

Step 2 — classify the goods and read the base rate

Classify the product to its 10-digit HTS line and read the Column 1 general rate — the most-favoured-nation rate that applies to normal-trade-relations countries, which in practice is nearly every country the US trades with. If the rate is ad valorem, meaning a percentage of value, you multiply it by the customs value. If it's specific, a fixed amount per unit, you multiply by the quantity instead. A smaller number of lines are compound, combining both, and some are duty-free outright.

Step 3 — add the additional tariffs by origin

This is the step that estimates most often get wrong. Depending on the country of origin, extra duties can stack on top of the base rate: Section 301 for Chinese-origin goods, Section 232 for steel and aluminium content, and newer reciprocal or emergency measures that vary by trading partner and change on short notice. These are almost always ad valorem, and they add to the base rate rather than compound with it — an 8.5% base plus a 7.5% additional tariff means 16% of value, not 8.5% multiplied by 1.075.

Step 4 — add the customs fees

Two federal fees sit on top of duty, and unlike the tariff layers, they're structurally stable — they don't move with trade policy, only with an annual inflation adjustment to the MPF floor and ceiling.

• Merchandise Processing Fee (MPF): 0.3464% of the customs value, subject to a per-entry minimum and maximum that CBP adjusts each fiscal year.
• Harbor Maintenance Fee (HMF): 0.125% of the customs value, charged on cargo arriving by ocean at a US port.

Do you pay MPF and HMF on every shipment?

Most commercial entries pay MPF, including shipments with a 0% duty rate, because it's charged on the value of the entry rather than on the duty owed — a duty-free product still generates a fee. HMF is narrower: it only applies to cargo that arrives by vessel at a US port, so air and land shipments are exempt from it. That single distinction is one reason two shipments of identical value can land at meaningfully different total costs, purely because of how they travelled.

Worked example one: 500 pairs of leather shoes from China

Take a Portland footwear importer bringing in 500 pairs of leather-upper shoes from a factory in Guangdong. Customs value is $20,000. The base HTS rate for many leather-upper shoe lines sits around 8.5% (confirm your exact 10-digit subheading — footwear classification is notoriously fiddly), and because the goods originate in China, a Section 301 duty applies. The shipment moves by ocean, so HMF is charged as well.

How is import duty calculated on electronics versus footwear?

The mechanism is identical — value, classification, origin, fees — but the inputs can pull the answer in a completely different direction. Take a five-person consumer electronics brand shipping 2,000 pairs of Bluetooth headphones from a contract manufacturer in Vietnam, sent by air, customs value $30,000. Many headphone and earpiece lines fall under HTS heading 8518, and a general (Column 1) rate of free is common for this product family — again, confirm your exact subheading rather than assuming. Vietnam isn't subject to Section 301, so no additional tariff applies to this particular line and shipment, and because the cargo is travelling by air rather than by sea, HMF doesn't apply either.

Put the two examples side by side and the pattern is obvious. The footwear shipment paid close to 20% of its value in duty and fees, almost entirely because of the Section 301 layer. The electronics shipment paid a third of one percent, entirely fee-driven, with no duty at all. Same formula, same four steps, wildly different outcomes — because origin and classification did all the work, not the arithmetic.

What the calculation does not include

Duty and fees are only part of landed cost. Freight, cargo insurance, customs brokerage, bonds and inland transport are real costs too — they just aren't part of the duty calculation itself. Keep the two separate in your head: duty is a percentage of customs value, worked out by the four steps above; logistics is what it costs, in dollars, to actually move the box from the factory to your warehouse.

Customs brokers often describe duty as three separate bills stapled together — the tariff line, the trade-remedy layer, and the fee layer — and the importers who get caught out are the ones who only budget for the first one and assume the rest is rounding error.

A note on accuracy

Every rate in both worked examples is illustrative and tied to a real HTS heading, but your exact 10-digit subheading, country of origin and the live Chapter 99 measures in force on your filing date decide your actual bill. Section 301, Section 232 and reciprocal-tariff rates move often — sometimes more than once a quarter — so treat any percentage you read in a blog post, including this one, as a starting point to verify rather than a number to file against. Nothing here is a customs ruling; it's an informational estimate only.