Complete Guide: What is Import Duty and Changes in 2025

International shipping is a great way for business owners to grow their customer base and boost revenue. However, navigating tax and customs regulations can be challenging, as non-compliance may lead to delayed shipments or costly fines.

This article explores the definition of customs duty, how import duties are calculated, who pays the tariffs on imported goods, and the latest updates on the United States import tariffs.

Importing goods to the USA can be complicated due to complex regulations and customs taxation. Atlantic Project Cargo’s customs clearance services make imports easy and stress-free. Our licensed customs broker will assist you during the process and help with duties and taxes.

Import duty is a tax imposed on goods brought into a country and collected by customs authorities. The amount is typically based on the product’s value. Depending on the context, import duties may also be called customs duties, import taxes, or import tariffs.

Customs duties serve two key purposes:

• Revenue generation to support government operations
• Market protection by making foreign goods more expensive. Duties give locally produced goods a competitive advantage

In some cases, high customs charges may also be used as a political or economic tool against specific countries.

Rates vary based on trade relations. The general rate applies to countries with normal trade relations, and the special rate is applicable to countries that are not developed or are eligible for an international trade program.

Customs duties are calculated based on several factors, primarily the goods’ classification, value, and country of origin. Here is a detailed breakdown of how they are determined.

Example Calculation

Let’s say you are importing 100 leather wallets from Italy into the US.

1. HTS Code
   Leather wallets fall under HTS code 4202.31.6000 (wallets with an outer surface of leather). The general duty rate for this code is 8%
2. Customs Value
   The invoice shows the wallets cost $20 each, so the total value is $2,000. Shipping and insurance to the US port add $200, making the CIF value $2,200
3. Apply Duty Rate
   Duty: 8% of $2,200 = $176
4. Additional Fees
   MPF: 0.3464% of $2,200 = $7.62, but since this is below the minimum, you’d pay $32.71 instead
5. Total Cost
   Duty ($176) + MPF ($31.67) = $207.67 in import duties and fees, on top of the $2,200 customs value

Note that this is a simplified example. Additional factors like trade remedies or specific entry requirements could adjust the final amount of the customs tax. For precise calculations, importers may contact our certified customs broker for help.

We have already found out what import duties are and how they are calculated. Let’s explore what import tariffs and taxes are.

What is a Tariff?

Tariffs are a specific type of import duty applied to imports (and sometimes exports). They can be fixed (a set amount per unit, like $5 per ton) or ad valorem (a percentage of the value, like 5% of the price).

Beyond revenue, tariffs are often tools for trade policy. They are used to discourage imports of certain goods, protect local industries, or retaliate in trade disputes.

For example, a country might slap a 25% tariff on imported steel to shield its steelmakers during a trade war.
 

Types of Tariffs

The responsibility for import taxes and customs duties is determined by Incoterms (International Commercial Terms), a globally recognized set of trade rules agreed upon between exporters and carriers. The two most common terms are:

• Delivered Duty Paid (DDP)
  The seller must cover all costs, including shipping, import taxes, and duties
• Delivered Duty Unpaid (DDU)
  The buyer must pay any import fees upon the shipment’s arrival and customs release

Customs charges are typically paid by the Importer of Record — the person or business bringing goods into a country. It’s up to them to manage all the paperwork needed for the import, as well as cover all duties and taxes.

The latest tariff changes impacting steel, aluminum, and derivative products took effect on March 12, 2025, and brought new compliance requirements for imports to the USA. Additionally, there are updates on tariff changes between the US, Canada, and Mexico.
 

New Steel & Aluminum Tariffs

A 25% tariff on steel and aluminum imports is now in effect. Derivative products impacted include:

• Aluminum: Wire, cables, bumper and body stampings, and other fabricated parts. The complete list is here
• Steel: Nails, fasteners, vehicle parts, pipes, tubes, and construction materials. The complete list is here

New Invoicing & Reporting Requirements

For aluminum imports, importers must indicate:

• Primary country of smelt
• Secondary country of smelt
• Country of cast

For steel imports, importers must indicate the country where the steel was melted and poured.
 

Commercial Invoice Adjustments

• Wholly steel or aluminum products remain on a single invoice line with the full value of the product assessed at the applicable tariff rate
• Derivative products must have separate lines for steel/aluminum content vs. other materials

The additional duties will only apply to the value of the steel or aluminum content, not the entire finished product.

Correct Invoice format (breaking out materials):

Import duties are crucial in international trade, influencing pricing, market competition, and government revenue. Understanding how they are calculated helps businesses and individuals plan their imports more effectively.