China is the largest trade partner of the US – 16.5% of total US imports of $3.2 trillion were imported from China. The main products that China exports to the United States are computers and broadcasting equipment (over $50B each). Many businesses want to start sourcing from China and get a piece of the pie. If you ship from China, you will need to go through the customs clearance process. The question is: How does customs clearance from China in the US work?
Customs clearance from China in the US
Customs clearance may be a challenge, especially for novice importers. It is required for most goods imported into the US. To go through customs clearance, you must have all the paperwork in order and pay applicable tariffs. It may seem like a daunting task, but the whole process is a breeze if you hire a licensed customs broker.
When do you have to hire a customs broker when shipping to the US?
A customs broker is an agent who assists importers with their customs clearance process. A formal entry in the US (also called a commercial entry) for shipments valued at $2,500 and above requires a broker. If the products are defined as controlled goods, a licensed customs broker is required regardless of the value.
Customs clearance in the US – customs entry step-by-step
1. Planning before the entry
Before you ship the products to the US, you have to make arrangements at the CBP port of entry of your choice.
2. The shipment arrives in the US
The imported goods arrive at the port of entry.
3. Entry documents are filed
Those who import to the US need to be registered as an Importer of Record (IOR) with Customs and Border Protection (CBP). The Importer of Record files entry documents for the consignment with the port director at the goods’ port of entry.
4. CBP authorizes the delivery
Once the documentation is checked, the delivery is authorized by the CBP.
5. Import tax is paid
Any fees and duties are paid in the total amount. The value is based on customs paperwork. The minimum taxable value (known as de minimis value) for imported goods in the US is $800. Controlled goods are always taxed, regardless of their value.
6. Cargo examination in the US
Sometimes, the cargo may undergo an examination, such as:
- VACIS exam/X-ray
- tailgate exam
- partial exam
- intensive cargo exams.
7. Release
The cargo is released, and the products can be circulated in the US market.
For more details, read our article on clearance in the US.
How long does customs clearance take?
Usually, customs clearance takes up to 24 hours. Nevertheless, the customs clearance process can sometimes take several days or weeks.
US customs tariffs on Chinese goods
The payment of duties (tariffs) is mandatory upon entry. The tariffs are taxes based on the consignment’s commercial value.
Customs duties for products imported into the US are available in the Harmonized Tariff Schedule (HTS for short). Each 10-digit HTS code identifies a product group based on the international Harmonized System developed by the World Customs Organization. Every HTS code (product category) has a customs duty rate. The classification number has to be used on the commercial invoice.
Where can I find China tariffs for imports to the US?
If you source products from China to the US, you need to remember about the additional duty in place, called “Section 301 tariffs” or “China tariffs.” The additional duty is imposed on about 60% of US imports originating in China. You can download the list of China tariffs from the HTS website or check it in the schedule.
China tariffs: examples
- Women’s suit-type jackets and blazers of wool or fine animal hair, containing 30 percent or more by weight of silk or silk waste
- HTS code 6204.31.10.10
- general duty rate is 7.5%, China tariff rate is 7.5% (so 15% in total)
- Smartphones
- HTS code 8471.60.20.00
- general duty rate is 0%, China tariff rate is 0% (no additional tariff)
Remember that various taxes are imposed on imports in the US, such as excise, state, and federal taxes.
Customs clearance from China in the US – documents
For your customs clearance process, you need to provide a set of documents such as:
- commercial invoice with the information about the country of origin and HTS code, etc.
- packing list (P/L)
- for sea freight, bill of lading, and ISF 10+2
- arrival notice authorized by a US Customs Agent
- CBP Form 7501 (Customs Entry Summary)
- CBP Form 3461 (Customs Release)
- for imports valued at $2,500 and above or containing controlled goods, a customs bond (acts as an insurance policy), single entry or continuous.
If you source controlled goods, check if you need an import permit in the US:
- alcohol and tobacco products: Alcohol and Tobacco Trade and Tax Bureau (TTB)
- cars and motor vehicles: Department of Transportation (DOT)
- chemicals: Environmental Protection Agency (EPA)
- food, cosmetics, medication, housewares, food-related items, and health devices: Food and Drug Administration (FDA)
- plants, plant products, wood, animals: US Department of Agriculture (USDA)
- toys and children’s products: Consumer Product Safety Commission (CPSC).
Customs clearance in the US – to sum up
The customs clearance process in the US can be complicated, but with the proper preparation, it can go smoothly. Your sourcing business will be more successful if you make sure to verify your potential Chinese business partner, sign a commercial contract, and carry out a quality check in China. The customs clearance is one of the last steps in the importing process.