A customs duty is a tariff or tax levied on goods when transported across international borders. Customs duties are imposed in order to protect a country’s import and export revenues by controlling the flow of goods into and out of the country.

While revenue is the primary consideration, customs duties may also be levied to protect a domestic industry from foreign competition.

Common Types of Customs Duty

  • Basic (Flat) Duty
    Basic customs duties are imposed at a specific rate based on the value of the goods and vary based on the country of origin.

  • Additional Customs Duty
    Commodities imported from certain countries may have a higher-than-normal duty rate assessed to them. This is also true on select product from specific countries (such as diamonds from the Ukraine).

  • Countervailing Duty (CV)
    CV duties are applied to a product[TA1]  if it is determined that the country of origin provides substantial subsidies or assistance to a local industry. This can be in the form of low-rate loans, tax exemptions, or indirect payments. This assistance potentially allows companies to export a product for substantially less than domestic competitors. After investigations by the International Trade Commission (ITC), a CV duty is levied based on the value of the subsidy.

  • Anti-Dumping (AD) / Safeguard Duty
    AD duties are assessed when it is determined that foreign suppliers or manufacturers are selling goods at a less-than-fair market value and are harming domestic industries. Dumping occurs when goods are sold at a price less than that of the exporter’s home market, or at a price lower than the goods’ cost of production. The amount of the AD duty is usually calculated to offset the margin of dumping.

Read more about Anti-Dumping and Countervailing duties here

customs duties


Determining Customs Duty:

Duties are assigned by government agencies such as United States Customs and Border Protection (CBP) after the importer has accurately disclosed the classification and value of the imported goods.

The rate of customs duties is either specific or on an ad valorem basis; meaning it is based on the value of the good. This rate is always a percentage of the total value of the commodity.

In the United States, the Harmonized Tariff System provides duty rates for virtually every commodity that exists; however, proper determinations of an item’s duty rate requires expert knowledge of the HTS system as well as classification standards.

Duties Management:

Duties management is a vital task for anyone looking to trade their goods and services. Duty management for those seeking to trade their goods and services, in addition to avoiding compliance risks, has the ultimate goal of reducing the cost of their global supply chain by decreasing the duties paid on imported or exported goods.

How Descartes Can Help:

Because of complex regulatory and reporting requirements, many businesses fail to take full advantage of the possibilities to reduce their duty spend. These businesses tolerate the potential for lost revenue and allow their competitors a distinct advantage in the market.

In order to optimize the opportunities for minimizing duties, a trader needs a proper solution that simplifies and automates the process. Automating the process and improving efficiency, increasing visibility and achieve higher trade compliance rates, while reducing risk and duty spend represents a simple way to generate significant returns from the reductions of duties.

With Descartes Customs Info™ Reference and Descartes Customs Info™ Manager, businesses can accurately assess what duties may exist on their imported or exported goods.

Powered by a sizable database of over 6 million reference documents, Descartes Customs Info™ Reference supplies a single access point where companies can access up-to-date information regarding existing duties. Utilizing this information provides the opportunity for substantial savings on a business’ global supply chain.