How to Calculate Import Duty: Step-by-Step Guide (2026)

Calculating US import duty is a multi-step process that begins with correctly classifying your product under the Harmonized Tariff Schedule (HTS) and ends with applying the correct duty rate to the proper customs value. A single error at any step — wrong HTS code, wrong valuation method, missed FTA preference, or overlooked Section 301 surcharge — can result in overpaying duties by thousands of dollars or underpaying and facing CBP penalties under 19 USC §1592. This guide walks through every step with real-world examples.

Step 1: Classify Your Product — Find the Correct HTS Code

Everything starts with the HTS code. The United States uses a 10-digit classification system: the first 6 digits are harmonized internationally (HS Convention), digits 7-8 are US-specific subheadings, and digits 9-10 are statistical suffixes. The duty rate is determined at the 8-digit level.

Classification follows the General Rules of Interpretation (GRI 1-6) in order:

1. GRI 1: Classify according to the heading text and any legal notes to the chapter or section.
2. GRI 2(a): Incomplete or unfinished articles are classified as complete if they have the essential character of the finished article.
3. GRI 2(b): Mixtures or combinations of materials are classified as if they consisted of the material that gives them their essential character.
4. GRI 3: When goods are classifiable under two or more headings: (a) most specific description prevails; (b) essential character determines; (c) the heading occurring last in numerical order wins.
5. GRI 4: Goods not classifiable under GRI 1-3 are classified under the heading of goods to which they are most akin.
6. GRI 5: Packaging and containers are classified with the goods they contain (with exceptions).
7. GRI 6: Subheading classification follows the same principles at the subheading level.

Pro tip: Use the PoliteDraft HTS database to search by product description and verify the correct 6-digit subheading, then drill down to the 8/10-digit level using USITC data.

Step 2: Determine the Duty Rate

Each HTS subheading carries up to three duty rate columns:

• Column 1 (General / MFN): Applies to goods from WTO member countries and countries with Normal Trade Relations (NTR) status. This covers over 95% of US imports by value. Rates range from Free (0%) to over 30% depending on the product.
• Column 1 (Special): Preferential rates under Free Trade Agreements (USMCA, KORUS, US-Singapore, US-Australia, GSP, and other preference programs). Often Free (0%). Claiming these rates requires that the goods meet the FTA's rules of origin and that the importer maintains supporting documentation.
• Column 2: Applies to countries without NTR status (currently Cuba and North Korea). Rates are significantly higher — often 20-90%.

Reading the HTS rate column: "Free" means 0% duty. "3.2%" means 3.2% ad valorem. Some rates are compound (e.g., "0.7¢/kg + 5.5%"), meaning you pay both a specific rate per kilogram and an ad valorem percentage. Rates expressed as fractions of a cent per unit (e.g., "0.5¢/dozen") require careful unit conversion.

Step 3: Determine the Customs Value (Transaction Value)

The US uses the transaction value method (19 USC §1401a) as the primary basis for calculating duty. Transaction value is the price actually paid or payable for the goods when sold for export to the United States, with certain additions and exclusions.

What MUST be included in the dutiable value:

• Selling commissions: Any commission paid by the buyer to the seller's agent (but NOT buying commissions paid to the buyer's own agent).
• Royalties and license fees: If the buyer must pay them as a condition of the sale. This is a common audit trigger — software license fees bundled with hardware imports are dutiable.
• Assists: The value of materials, tools, dies, molds, design work, or engineering provided by the buyer to the seller for use in producing the imported goods. CBP scrutinizes assists aggressively — undeclared assists are the #1 valuation audit finding.
• Packing costs: The cost of containers and covering, and the cost of labor for packing, are dutiable whether itemized or included in the price.
• Goods and services supplied by the buyer: If the buyer provides materials or components to the seller that are incorporated into the imported goods, that value must be added.

What is EXCLUDED from dutiable value:

• International freight, insurance, and transportation costs after importation (CIF vs FOB: the US uses FOB-based valuation, not CIF).
• US customs duties, federal excise taxes, and merchandise processing fees (MPF).
• Buying commissions (commissions paid by the buyer to their own purchasing agent).
• Interest charges under 19 USC §1401a(e) if they meet specific criteria (separate written agreement, not contingent on importation, at prevailing commercial rates).

Step 4: Apply Additional Duties (Section 301, 232, ADD/CVD)

The Column 1 duty rate is only the STARTING point. Many imports are subject to additional layered duties:

Section 301 — China-Specific Additional Duties

• List 1 & 2 (25%): Industrial machinery, chemicals, base metals, medical devices.
• List 3 (25%): Electronics, furniture, textiles, toys, most consumer goods.
• List 4A (7.5%): Apparel, footwear, mobile phones, certain electronics.

Section 301 duties are applied ON TOP of the Column 1 rate. Example: A product with a 5% Column 1 rate and 25% Section 301 List 3 duty pays 30% total (5% + 25%).

Section 232 — National Security Tariffs

• Steel (25%): Most Chapter 72-73 products.
• Aluminum (10%): Most Chapter 76 products.

Section 232 is cumulative with Section 301 where both apply (rare but possible for certain steel/aluminum derivative products from China).

Anti-Dumping / Countervailing Duties (ADD/CVD)

ADD/CVD rates are product-specific and country-specific, ranging from 1% to over 500% in extreme cases. They are applied IN ADDITION to all other duties. The Commerce Department publishes ADD/CVD deposit rates by exporter — your specific supplier may have a different rate than the country-wide rate.

Step 5: Calculate — Worked Examples

Example 1: Simple MFN Import (No Additional Duties)

You import $50,000 worth of stainless steel kitchen utensils (HTS 8215.99) from Germany. The Column 1 rate is Free. No Section 301, 232, or ADD/CVD applies.

Calculation: $50,000 × 0% = $0 duty. You pay only the merchandise processing fee (MPF, 0.3464%, minimum $31.67, maximum $614.35) and harbor maintenance fee (HMF, 0.125%) if arriving by vessel.

Example 2: Section 301 Import from China

You import $100,000 worth of Bluetooth speakers (HTS 8518.22) from China. Column 1 rate: 3.9%. Section 301 List 3: 25%.

Calculation:

• Column 1 duty: $100,000 × 3.9% = $3,900
• Section 301 duty: $100,000 × 25% = $25,000
• Total duty: $3,900 + $25,000 = $28,900

Note: Section 301 is calculated on the same transaction value base, not on top of the Column 1 duty. Both are ad valorem on the customs value.

Example 3: FTA Preferential Rate

You import $75,000 worth of automotive parts (HTS 8708.99) from Mexico. Column 1 General rate: 2.5%. Column 1 Special (USMCA): Free. The goods qualify under USMCA rules of origin.

Calculation: $75,000 × 0% = $0 duty. Savings vs. MFN: $1,875. You must maintain the USMCA certification of origin for 5 years per 19 CFR §182.

Example 4: Compound Rate + ADD

You import 20,000 kg of certain preserved mushrooms (HTS 2003.10) from China. Column 1 rate: 8.8¢/kg. ADD rate: 198.63% (China-wide rate for preserved mushrooms).

Calculation (assuming transaction value of $30,000):

• Column 1 duty: 20,000 kg × $0.088/kg = $1,760
• ADD: $30,000 × 198.63% = $59,589
• Total duty: $1,760 + $59,589 = $61,349

This example illustrates why ADD/CVD can be devastating — the anti-dumping duty alone is nearly double the value of the goods.

Step 6: Add Merchandise Processing Fee (MPF) and Harbor Maintenance Fee (HMF)

In addition to customs duties, most imports are subject to:

• MPF: 0.3464% of the customs value, minimum $31.67, maximum $614.35 per entry. This is a CBP processing fee, not a duty — but it is collected at entry.
• HMF: 0.125% of the value of cargo loaded or unloaded at a US port. Applies only to vessel shipments, not air or land freight.

FTAs do not reduce MPF or HMF — these are fees, not duties. Only duty-free entries under certain preference programs (e.g., GSP, CBTPA) may waive MPF.

Common Mistakes That Cost Importers Money

1. Using CIF value instead of FOB value: The US uses FOB-based transaction value. If your supplier quotes CIF (which includes international freight and insurance), you must deduct those costs to arrive at the dutiable value. Over-declaring by including freight means you pay duty on freight — a pure waste.
2. Not claiming FTA preferential rates: If your goods qualify for USMCA, KORUS, or other FTA rates but you fail to claim them at entry, CBP will apply the higher Column 1 General rate. Post-entry FTA claims are possible (via CF 5405 or PSC) but time-limited.
3. Ignoring Section 301 when it applies: The most expensive mistake. Underpaying Section 301 by even 1% across $1M in imports creates $10,000 in potential liability per entry — and CBP audits aggregate across years.
4. Not declaring assists: CBP considers undeclared assists to be negligence (20% penalty) or gross negligence (40% penalty) on the duty owed on the assist value — on top of the duty itself.
5. Wrong valuation for related-party transactions: Transactions between related parties (e.g., US parent and foreign subsidiary) are subject to the "circumstances of sale" test. If the relationship influenced the price, CBP may reject the transaction value and use a fallback valuation method.