USA Import Taxes

Small businesses often import products from around the world.

Countries often charge duties, or "tariffs," on goods, a type of tax on products entering or exiting a country. The U.S. charges relatively low import taxes on most goods, averaging around 2 to 10 percent of the amount paid for the import. The tax depends on exactly what the import is; rates are listed in the thousands of pages that make up the Harmonized Tariff Schedule, or HTS.

Tariffs

Tariffs raise money for a government, like any other tax, and affect how expensive and, therefore, competitive goods are. Countries usually charge much higher import tariffs than export tariffs to make foreign goods coming into the country more expensive relative to domestic goods; exports, on the other hand, are usually only taxed if the item being exported is scarce --- such as teak in Thailand --- or very expensive and highly regulated, such as diamonds in Angola.

U.S. Tariffs

The U.S. charges relatively low tariffs because it's one of the most vocal champions of free trade in the international arena. Free trade literally means the abolition of trade barriers such as tariffs. However, while the U.S. frequently advocates for free trade through the World Trade Organization, or WTO; the International Monetary Fund, or IMF; diplomatic channels; and other venues, actual policies prefer looser regulations and strategically low tariffs, as opposed to no tariffs.

Free Trade Agreements

Through a series of free trade agreements, the U.S. has abolished a majority of tariffs for about a dozen trading partners, namely Australia, Canada, Israel, Japan, Mexico, Peru and Singapore. For these countries, tariffs for most items are nonexistent, with some exceptions. For example, most agricultural products or products made from raw materials such as cotton simply receive a discounted tariff.

HTS

All duties on all products are detailed in the HTS, which is updated annually. More than 100 countries use the HTS classification system, which lists items by internationally recognized codes. The HTS is divided by type of product into 97 chapters, including "Zinc and Articles Thereof" and "Cars, Trucks, Tractors and Other Types of Motorized Vehicles."

References

• U.S. International Trade Commission: By Chapter, Harmonized Tariff Schedule
• U.S. International Trade Commission: About Harmonized Tariff Schedule
• American Importers: U.S. Import Requirements
• Customs and Border Control: Trade
• Progressive Policy Institute: Virtually All Countries Use the Same Tariff System