Frequently Asked Questions About US Tariffs

Product classification uses the Harmonized Tariff Schedule (HTS), which contains over 17,000 ten-digit classification codes. Start by identifying your product's material composition, intended use, and key characteristics. The USITC maintains a searchable HTS database where you can search by keyword or browse chapters. Chapter notes provide legal definitions and classification rules that take precedence over general descriptions. For complex products, consider requesting a binding ruling from Customs and Border Protection, which provides official classification that protects you from penalties if followed correctly. These rulings typically take 30-90 days but offer certainty for ongoing imports. Licensed customs brokers can also provide classification assistance based on their expertise with similar products. Misclassification carries serious penalties, including duty adjustments, interest charges, and potential fraud investigations if CBP determines willful violations occurred.

The exclusion process for Section 301 tariffs has varied significantly since 2018, with multiple exclusion tranches opening and closing at different times. As of 2024, the USTR periodically reopens exclusion processes for specific product categories, typically announced through Federal Register notices. Applications require detailed information including HTS classification, product specifications, annual import quantities and values, and justification explaining why the product cannot be sourced from non-Chinese suppliers or produced domestically. You must demonstrate that exclusion serves US economic interests and that the tariff creates severe economic harm to your business disproportionate to the policy objective. The USTR typically allows 30-60 days for submission after opening an exclusion process, followed by public comment periods where competitors or other stakeholders can oppose your request. Approval rates have ranged from 15% to 35% depending on the product category and tranche. Approved exclusions are retroactive to the application date and typically last 12 months, though some have been extended. Monitor the USTR website and Federal Register for exclusion announcements relevant to your products.

Tariffs are broad import taxes applied to all imports of specific products from designated countries, set through executive action or legislation. Antidumping duties (ADD) and countervailing duties (CVD) are company-specific penalties imposed after investigations by the Commerce Department and International Trade Commission determine that foreign companies sold products below fair value (dumping) or benefited from foreign government subsidies causing injury to US industries. ADD/CVD rates vary by company based on calculated dumping margins or subsidy amounts, often ranging from 10% to over 200% in extreme cases. These duties apply regardless of other tariff programs and stack on top of normal tariffs and Section 301 tariffs. For example, Chinese steel products might face 25% Section 232 tariffs, 25% Section 301 tariffs, and company-specific ADD rates of 50-150%, creating combined duty rates exceeding 200%. ADD/CVD orders remain in effect indefinitely until revoked through sunset reviews conducted every five years. Currently over 580 ADD/CVD orders affect various products including steel, aluminum, shrimp, honey, furniture, and solar panels. The Commerce Department maintains a consolidated ADD/CVD order list on its website showing all active orders, countries, and duty rates.

Small businesses face disproportionate tariff impacts due to limited resources for trade compliance, less negotiating leverage with suppliers, and inability to absorb cost increases that larger competitors can manage temporarily. A 2023 NFIB survey found 68% of small importers struggle with classification and compliance compared to 23% of large companies with dedicated trade departments. Small businesses typically cannot pursue supply chain diversification as quickly, lacking the volume commitments that make alternative suppliers willing to modify production or the capital to invest in new supplier relationships. They also face higher per-unit costs for customs brokerage, legal consultation, and exclusion applications. Large corporations spread these fixed costs across millions of units while small importers might pay $500-2,000 in professional fees to properly classify and import products worth only $10,000-50,000. Small businesses have less access to trade financing to manage cash flow impacts from duty payments, which CBP requires within 10 days of import. However, small businesses may qualify for informal entry procedures for shipments under $2,500, reducing documentation requirements. The SBA offers trade finance programs and SBDC offices provide free counseling on international trade, though awareness of these resources remains limited among small importers.

The United States maintains 14 free trade agreements covering 20 countries, each with different product coverage and phase-in schedules. The USMCA (US-Mexico-Canada Agreement) replaced NAFTA in 2020 and eliminates tariffs on most goods meeting rules of origin requirements, covering $1.5 trillion in annual trade. Other significant agreements include CAFTA-DR (Central America and Dominican Republic), the Korea FTA, and agreements with Australia, Chile, Singapore, and Peru. These agreements typically eliminate 80-95% of tariffs immediately, with remaining sensitive products phasing to zero over 5-15 years. However, products must meet rules of origin proving substantial North American or partner country content to qualify for preferential rates. For USMCA, automotive products require 75% regional value content and specific labor value content provisions. Companies must maintain detailed records documenting origin and provide certifications to claim FTA benefits. Some products remain excluded from FTA coverage, particularly certain agricultural goods, textiles, and items subject to Section 232 national security tariffs. The USTR website provides full text of all FTA agreements including product-specific tariff schedules and rules of origin. Even with FTAs, Section 301 and Section 232 tariffs may still apply as they typically supersede FTA commitments under national security or unfair trade practice exceptions.

Landed cost calculation requires adding multiple components beyond the product purchase price. Start with the FOB (free on board) price paid to the supplier, then add international freight costs to the US port of entry. This sum creates the basis for calculating tariffs, as duties apply to the CIF value (cost, insurance, and freight). Multiply this value by the applicable tariff rate from the HTS classification, including any Section 301, Section 232, or ADD/CVD duties that apply cumulatively. Add merchandise processing fees of 0.3464% of value (minimum $27.75, maximum $538.40 per entry) and harbor maintenance fees of 0.125% of cargo value. Include customs broker fees (typically $75-200 per entry), domestic freight from port to warehouse, and any inspection or storage fees. For example, a $10,000 FOB shipment from China with $1,500 freight might face 25% Section 301 tariffs ($2,875), MPF ($40), HMF ($14), broker fees ($150), and domestic freight ($400), creating a total landed cost of $14,979, nearly 50% above FOB price. Many businesses underestimate these additional costs, creating cash flow problems and pricing errors. Customs brokers and freight forwarders can provide detailed landed cost calculations for specific shipments. Building spreadsheet models with all cost components helps evaluate whether domestic sourcing or alternative countries offer better total costs than current suppliers.