When importing into the USA, understating the US’ customs clearance procedure is a must. Customs clearance in the USA is overseen by the United States Customs and Border Protection (CBP), its primary border control organization. It is required to present the CBP with multiple documents and to pay due duties.
Is a Customs Broker needed?
A formal entry for shipments valued over 2,500 USD requires a broker for shipment, and at any value it the consignment consists of controlled goods. If your shipment is under 2,500 USD, US Customs and Border Protection will allow the goods to enter the country under an informal entry. Nonetheless, if your goods are regulated by the US’ Food and Drug Administration (FDA) or other agency, are restricted goods or antidumping duties are applied, then you need a formal entry.
For the formal entry, you, as the Importer of Record (IOR), must ensure that you have complete and accurate documentation prepared before delivering the goods to the place of destination. The documentation is then reviewed by your customs broker, who further deals with the paperwork with a power of attorney. They can also advise what type of bond the importer should choose. Put simply, a customs broker is an intermediary between the importer and the customs authority. In the US, a customs broker must be licensed.
The US’ Customs and Border Protection does not require an importer to have a license or permit. Nevertheless, other agencies may require a license, permit, or other certification depending on the imported commodity.
Customs clearance in the USA – documents
Before importing into the USA, we recommend getting familiar with CBP policies and procedures. One of the basic requirements is providing documents for customs clearance:
- A commercial invoice is obtained from the exporter. CI includes data such as:
- date of issue
- invoice number
- name and address of both the exporter and importer
- product name and quantity
- the port of entry
- total invoice value and currency of payment
- the unit value (given in a specific currency)
- the unit of measure: goods’ net and gross weight
- the country of origin
- HTS classification code
- Incoterms delivery terms
- means of transport
- Packing List (P/L), if the gross and net weight has not been shown in the invoice. Data in the P/L:
- date of issue
- freight invoice number
- data of the shipper and consignee
- type and number of packages
- content of each package
- the net and gross weight of goods (unit and total)
- conditions of delivery
- Bill of Lading (B/L, BOL) obtained from the freight forwarder. It must be delivered to the destination port for the goods to be collected. B/L is not a contract for the carriage of goods. Data included in the bill of lading:
- bill of lading conditions on the first page
- shipper’s data
- consignee’s data
- details of the company/person to be notified of the cargo arrival
- container number
- quantity, type, and weight of goods
- optional: FREIGHT PREPAID (the shipper covers costs) or FREIGHT COLLECT (transport costs covered by the consignee)
- For airfreight, an Air Waybill (AWB) is used. AWB confirms the transport contract’s conclusion and obliges the carrier to deliver the cargo to a specific place.
- Entry Manifest (CBP Form 7533).
In case the cargo arrives in the USA by ocean vessel, the “Importer Security Filing” (ISF 10+2) must be submitted.
Customs clearance in the USA – specific import procedures
When importing particular groups of products, you must ensure that they comply with the US market regulations. For example, the federal agency Food and Drug Administration (FDA) oversees the safety of such products as:
- human and veterinary drugs
- biological products
- medical devices
- tobacco products
- electronic products that emit radiation
For FDA Guidance Documents, click here.
There can also be conducted a USDA exam. United States Department of Agriculture runs tests on foods and wood products to ensure that the products do not contain pests, diseases, and insects’ infestations. Read about bringing agricultural products into the United States on the CBP’s website.
CBP has a right to examine any shipment imported into the United States. There are some types of CBP’s exams:
- VACIS exam/X-ray, the most common exam type. The whole container goes through an X-ray in search of contraband, like drugs, currency, or guns
- tailgate exam, that involves opening the back of the container, usually after the X-ray exam
- partial exam, when CBP selects random cartons
- intensive cargo exams. For this type of exam, the cargo is taken to a Centralized Examination Station (CES) at the importer’s expense. Usually takes several days
There are also different rules when it comes to importing samples. Sample goods are classified under chapter 98 of the US Harmonized Tariff Schedule. Most imported samples are under HTS number 9811.00.60. Though bear in mind that samples classified under the number must not be valued over 1 USD. Moreover, the samples cannot be a saleable item; therefore, they must be permanently marked, torn, or otherwise mutilated. Sample imports classified under this HTS classification and meeting the above requirements are free of duty from any country.
Customs clearance in the USA – agencies
If your consignment contains, among others, tobacco, alcohol, or wildlife products, you must contact the appropriate agency before it arrives at the port of entry. Below are some of the agencies that regulate the import or issue permits, licenses, or certificates to import into USA products such as:
- vegetables, plants and its articles, animals and its products, meat and its articles, poultry and its products, wood packaging material – the US Department of Agriculture
- firearms and ammunition, explosives, alcoholic beverages – the Bureau of Alcohol, Tobacco and Firearms
- trademarked articles, artifacts, and cultural property – the US Customs and Border Protection
- medicines, narcotics and certain drugs, biological materials, milk, dairy and cheese products, fruit and nuts – the US Food and Drug Administration
- household appliances, commercial and industrial equipment, petroleum and petroleum products – the US Department of Energy
- fish and wildlife, hunting trophies (furs, skins, shells), pets – the US Fish and Wildlife Service
- radioactive materials and nuclear reactors – the Nuclear Regulatory Commission
- toys and other consumer products – the US Consumer Product Safety Commission
What about the customs duties and taxes on imports?
The customs duties can be found in the US’ tariff system Harmonized Tariff Schedule, HTS for short. The rates of duty may be assessed as:
- ad valorem – a percentage of the merchandise’s value
- specific – a specified amount per unit of weight/other quantity
- compound rates – a combination of a specific rate and an ad valorem rate
On average, the USA’s customs tariff is 3.4%, one of the lowest in the world. Tariffs depend on the origin of the product. For example, in some cases, there are so-called added Chinese Tariffs (“Section 301”), higher than the general rate. The higher rate also applies if the products originate in North Korea or Cuba.
Take, for example, the duty rate of men’s and boy’s blue denim (code 6203.32.20). The general duty rate is 9.4%. The special duty rate 0% is on products from Colombia, Panama, Australia, and many other countries. The duty rate for North Korea and Cuba is much higher – 90%. In this case, products of China have an additional duty of 7.5% to the general rate.
Higher customs tariffs are imposed on products such as sugar and confectionery, dairy products, clothing, beverages, and tobacco. There are also excise taxes on tobacco and alcohol. For example, the cigarette tax is imposed by both the federal and state governments. The federal government charges an excise tax of 1.01 USD for a standard pack when the states’ tax varies from 0.17 USD in Missouri to 4.98 USD per pack in Washington, DC.
Tariffs are required if the consignment is valued over 200 USD. If the shipment is from Canada, then the customs threshold is USD 2,000.
Some countries have preferential rates. As Canada and Mexico are bound with the USA by the NAFTA agreement, the customs tariffs are non-existent or lowered. Most of the developing countries stated in the Generalized System of Preference also have a preferential rate.
How to calculate and pay the due duties?
For the most part, customs value is the transaction value. Customs duties are calculated ad valorem on the transaction value. Therefore, it is necessary to provide the CBP with invoice and bill of lading or airway bill, documenting the transaction value (price). The value consists of the goods’ price along with packaging, shipping and insurance cost. Most goods’ customs duty assessment is done by the importer, by filling the documentation electronically.
The payment of duties, taxes, and other debts owed CBP is electronic or made by authorized charge cards. The US Customs collect import duty/tax on every import coming into the US unless the merchandise is unconditionally free of duty. Even though, the goods must be cleared.
Bear in mind that every importer must purchase a bond (surety). The bond ensures the payments of all taxes, fees, and duties relating to import. It can be a single-entry bond or an annual bond that covers all imports for one year. If you use an annual bond, you can retrieve your goods before the payment of all import-related duties.
Customs clearance in the USA – customs entry
The customs (entry) procedure is as follows:
- The shipment arrives at the port of entry.
- The Importer of Record files entry documents for the goods with the port director at the goods’ port of entry.
- The delivery is authorized by the CBP, also meaning the documentation is in order.
- Any duties and fees are paid in a full amount.
- Cargo may be subject to an intensive exam.
- The goods are released.
If your shipment’s value exceeds 2,500 USD, you need to make a formal entry, also called a commercial one. Usually, for imports with a total value below 2,500 USD, an informal entry is possible, though there are exceptions.
To make a customs entry, you need an Importer ID Number. You can get the US Customs Assigned Number by submitting Form 5106 to CBP. If you are a non-US resident/foreign IOR, you are required to present a copy of your company’s Certificate of Incorporation.
At least a week before the expected arrival of your goods in port, or no later than ten days after arrival, fill out CBP forms 5106 (if you do not have an Importer ID Number), as well as 7501 (Entry Summary) and Release Document. Purchase the aforementioned customs bond if you do not use an annual one. Bring the paperwork (including commercial invoice, packing list, and other documents) and bond to the CBP port for a review. By and large, the review of filled entry documentation takes eight working hours.
Next, if the entry documents have been approved, take them to the CBP Officers office that is the closest to where your goods are and await another eight working hours for processing. Then, your goods are released or undergo an examination at CBP’s designated site.
What if you fail at customs?
Bear in mind that if the goods arrive, CBP will not notify you – it is your carrier’s responsibility. If you or your customs broker do not present a customs entry within 15 days of arrival at the port of entry, the shipment may be moved to a warehouse. The importer bears the storage costs. After six months, if still no entry has been presented, the goods are destroyed or sold.
Note that US Customs levies severe penalties for fraud or negligence. The criminal penalty may be up to twice the goods’ value. In more serious cases, you can be sentenced to imprisonment. Ensure your documentation is complete and filled accordingly, due duties are paid, and the bond is purchased. You are accountable for the import, not the shipping company or other parties.
The information is provided for reference and is subject to change.