Guide to International Shipping Taxes and Tariff Exclusions

When executing an international shipping strategy, you must consider import fees. Every nation has its own rules regarding the taxes people must pay to ship goods into the country. As a company looking to conduct large international shipping, being aware of the fees you could face will help you achieve more success in your endeavors.

This guide can help you learn more about why these tariffs exist and how you can qualify for possible reinstatement and exclusions. That way, you can ship your products internationally with confidence.

Intro to International Shipping Tax

There are three main types of international shipping taxes you should know about — import taxes, tariffs and duties.

Understanding Import Taxes

Governments define import taxes using a standard percentage of any additional cost on the import product. Depending on the country, the import tax can either be a Goods and Services Tax (GST) or a Value-Added Tax (VAT). These two specific taxes are similar in implementation, but both apply to different products according to the importing country.

It’s important to remember that every country will have different import taxes that you should know about. For example, Germany may have a different import tax for the same product entering their country than New Zealand. The United States lacks a VAT or GST, which causes a lot of U.S. companies to assume the same is true of other countries. Having a shipping logistics partner can help you navigate each country’s different import taxes.

Understanding Tariffs

Many exporting companies confuse tariffs and duties, but these two terms have some key differences. Tariffs are fees that governments impose on certain imports, including specific products or categories of products at certain times. For instance, North American countries currently have zero tariffs under the United States-Mexico-Canada Agreement (USMCA) trade agreement. Conversely, the United States has a blanket 25% tax on imports from China.

Tariffs can drastically change the prices of imported goods, as consumers are typically the ones to absorb the cost of tariffs. Governments can also change tariffs rapidly, based on the government’s whim of imposing restrictions on other countries to either put pressure on another country or protect domestic industries from competing with less expensive foreign products.

understanding shipping duties

Understanding Duties

Exporters incur duty fees every time they ship a product to another country. Governments set duty fees to control how freely a certain product can enter the country. For instance, if the United States is manufacturing a lot of steel, the government may put a 100% duty fee on imported steel. This will stop other countries from sending too much steel into the United States economy, affecting domestic businesses.

Duties are a sort of border protection for governments to protect local economies, domestic jobs, resources, products and more. Note that duties can change, but they will always be present. They can vary depending on the current needs of the country receiving the imported goods. Countries will often base their import duties on agreements and trade negotiations.

Intro to Tariff Exclusions

As you navigate a volatile worldwide economy, you need to find ways to save your business money through legal means wherever possible. Countries continue putting trade restrictions in place, and world events can happen at any time that can disrupt the supply chain and complicate things even further. Part of staying resilient in the worldwide market is to find those areas where you can save money. Reinstated tariff exclusions could be one of those ways.

The Office of the United States Trade Representative (USTR) has released various tariff exclusions you can apply for as a shipper. Submitting your exclusion request and having the USTR grant it requires plenty of work. It’s more than a one-time process, since you’ll have to apply for new exemptions as you discover the need for them.

Granted exclusions can be specific to certain products, while the USTR grants others at the Harmonized Tariff Schedule (HTS) classification. You may also need to show proof of exclusion eligibility to the United States Customs and Border Protection (CBP), so always keep your information organized and ready to defend against the scrutiny of the CBP.

Every round of exclusion has a set validity period with expiration dates. The USTR does open some brief-window comment periods to extend previously granted tariff exclusions. You can use this opportunity to seek an extension of your tariff exclusions or oppose competitors so your company can continue having an advantage in the market and the shipping world.

When Are Tariffs Imposed?

Governments impose tariffs anytime, sometimes seemingly at a whim. While there are complex reasons for governments to impose tariffs on imports, here are the four main reasons to understand:

  • Protecting new domestic industries from failure on account of established foreign companies taking up all their sales
  • Protecting inefficient or aging industries from failing due to foreign competition
  • Protecting domestic producers from dumping, which is when a foreign company sells a product for less money in a foreign market than it does in its domestic market
  • Raising revenue

There are arguments for and against tariffs, both domestic and foreign. It’s important to understand the reasons for tariffs as you navigate your company’s international shipping needs.

How to Get Started With Tariff Exclusions

To get started with tariff exclusions, you need to find the right experts to help you along the way. A shipping logistics partner will calculate the best shipping solutions to fit your needs, whether you’re shipping by ground, rail, air or sea.

International shipping can be a confusing world to navigate alone. Instead, partner with an expert you can trust to ensure you get the best shipping rates possible. A shipping partner can also get you the tariff exclusions you need to make a higher profit and expand your budget for exponential growth.

tariff exclusion help Stockwell International

Get Help With Tariff Exclusions

Stockwell International Inc. is ready to help your company with its freight needs. Since our founding in 1971, we have grown to become a leading freight forwarder in the international market, specializing in various services that can ensure your shipping success. With our help navigating the complexities of international shipping, your company can get closer to achieving its goals.

We invite you to request a quote online today, and one of our team members will contact you within 24 hours to help you take the next step.

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