CBP duty refers to the customs duty collected by U.S. Customs and Border Protection on goods imported into the United States. It is calculated using the Harmonized Tariff Schedule based on product classification, value, and country of origin. Importers are legally responsible for paying duties before goods are released. CBP duties serve multiple purposes, including protecting domestic industries, generating government revenue, enforcing trade laws, and ensuring import compliance. Understanding how CBP duty explanation helps and works importers estimate costs accurately and avoid penalties.

TOC

What Is a CBP Duty? (Definition & Core Concepts)

US Customs Duty Explained — Simple Definition

CBP duty is a government charge applied to goods when they are brought into the United States from another country. It is collected by U.S. Customs and Border Protection at the time of import. In practical terms, this duty represents the cost of legally entering foreign-made products into the U.S. market. The amount of duty depends on how the product is classified under the Harmonized Tariff Schedule, its declared customs value, and its country of origin.

Role of US Customs and Border Protection (CBP)

U.S. Customs and Border Protection is the federal agency responsible for enforcing customs and trade laws at U.S. borders and ports of entry. CBP reviews import documentation, inspects shipments, verifies tariff classifications, and collects duties, taxes, and fees. In addition to revenue collection, CBP plays a major role in national security, preventing illegal goods, counterfeit products, and unsafe items from entering U.S. commerce.

Difference Between Duty, Tariff, and Tax

A tariff is the published rate or schedule that determines how much duty applies to a product. Duty is the actual amount paid based on that tariff rate. A tax is a broader term that includes domestic charges such as income tax or sales tax. In international trade, duties are a type of tax, but they apply only because goods cross a border. Tariff is the policy framework, while duty is the enforced payment.

Why US Customs Duties Matter

Protecting Domestic Industries and Jobs

Customs duties increase the cost of imported goods, which helps domestic manufacturers compete with foreign producers. By making imports more expensive, duties encourage businesses and consumers to buy locally produced goods. This protection helps support domestic industries and preserve jobs, especially in sectors vulnerable to low-cost foreign competition.

Government Revenue and Trade Regulation

CBP duties generate substantial revenue for the U.S. government. While revenue is no longer the primary goal of tariffs, it remains an important outcome. Duties also help regulate trade by discouraging unfair pricing, managing import volumes, and ensuring compliance with trade regulations.

CBP’s Role in Security and Compliance

CBP duties are closely linked to enforcement and compliance. Goods that are undervalued, misclassified, or improperly documented may be delayed, penalized, or seized. Through duty enforcement, CBP ensures that importers follow U.S. trade laws and that illegal or unsafe goods do not enter the country.

How CBP Duty Is Calculated

Harmonized Tariff Schedule (HTS)

Every imported product must be classified under the Harmonized Tariff Schedule of the United States. This classification determines the applicable duty rate. HTS codes are based on the product’s material, function, and intended use. Even small classification errors can result in higher duties or penalties, making accurate HTS classification essential.

Types of Duty Rates (Ad Valorem, Specific, Compound)

CBP uses three main types of duty rates. Ad valorem duties are calculated as a percentage of the product’s customs value. Specific duties are charged as a fixed amount per unit, such as per kilogram or per item. Compound duties combine both methods. The duty type applied depends entirely on the HTS classification of the product.

Other Costs and Fees (Taxes, MPF, HMF)

In addition to customs duty, CBP may collect other charges. The Merchandise Processing Fee applies to most formal entries, while the Harbor Maintenance Fee applies to goods entering U.S. ports by sea. Some products may also be subject to additional taxes or trade remedy duties, increasing the total import cost.

Who Pays CBP Duty and When?

Importer of Record Responsibilities

The importer of record is legally responsible for paying CBP duty. This may be the buyer, seller, or an authorized customs broker. Duties must be paid or secured before CBP releases the goods into U.S. commerce.

Personal vs Commercial Imports

Commercial imports require formal customs entry and full duty payment based on HTS classification. Personal imports, such as items carried by travelers, must still be declared and may be subject to duty depending on value and type. Failure to declare personal goods can result in penalties and duty assessments.

Special Rules and Exemptions

Certain imports may qualify for duty exemptions under specific rules. Changes to the de minimis threshold in 2025 expanded duty liability for many low-value shipments, particularly in e-commerce. As a result, more shipments are now subject to CBP duty than in previous years.

Duty Assessment and CBP Processes

Declaration and Entry Submission

Duty assessment begins when import documentation is submitted to CBP. Commercial invoices, packing lists, and entry forms provide the information needed to determine classification, value, and duty owed. Errors in documentation are a common cause of delays and reassessments.

CBP Inspections and Classification Reviews

CBP has the authority to inspect shipments and review tariff classifications after entry. If CBP determines that goods were misclassified, it may reclassify them and issue a bill for additional duty. This makes post-entry audits a significant compliance risk for importers.

Estimated vs Actual Duty (Liquidation)

Initial duty payments are often estimates. After CBP completes its review, the entry is liquidated, and the final duty amount is determined. Importers may receive a refund or be required to pay additional duty based on the liquidation outcome.

Common Duty Calculation Examples

Example 1 – Consumer Electronics

A consumer electronics product classified under an HTS code with a 5 percent ad valorem duty will be assessed duty based on its declared value. If the customs value is $10,000, the duty owed would be $500, excluding other fees.

Example 2 – Textile Goods

Textile products often carry specific or compound duties. A garment may be charged a fixed rate per unit plus a percentage of value, making accurate classification and description critical to correct duty calculation.

Special Duty Categories and Trade Policies

Anti-Dumping and Countervailing Duties

These duties apply when imported goods are sold at unfairly low prices or subsidized by foreign governments. They are imposed in addition to normal tariffs and are intended to protect U.S. industries from unfair competition.

Free Trade Agreements (USMCA and Others)

Free trade agreements allow qualifying goods to enter the U.S. at reduced or zero duty rates. To qualify, goods must meet strict rules of origin and documentation requirements. Failure to meet these requirements results in full duty liability.

Duty Drawbacks and Refunds

Duty drawback programs allow importers to recover duties paid on goods that are later exported or destroyed under CBP supervision. This is commonly used in manufacturing and re-export supply chains.

FAQs Related to CBP Duty

What Is the HTS Code and Why It Matters?

The HTS code determines the duty rate applied to imported goods and is the foundation of customs classification.

How Does CBP Calculate Import Duty?

CBP calculates duty using the HTS rate applied to the product’s customs value, along with any additional fees or trade remedies.

Can You Reduce Duties Legally?

Duties can be reduced through accurate classification, free trade agreements, duty drawback programs, and Foreign-Trade Zones.

What Happens If You Don’t Pay Duties?

CBP may hold shipments, impose penalties, or seize goods if duties are not paid.

Are Certain Goods Always Duty-Free?

Some goods qualify for duty-free treatment under trade agreements or specific classifications, but most imports carry some duty obligation.

How Do Trade Agreements Affect Duty Rates?

Trade agreements can significantly reduce or eliminate duties when products meet origin rules and are properly documented.

Table of Contents