What is the difference between a tariff and a duty?
A tariff is a tax policy or rate imposed on imported goods by a government. It is expressed as a percentage (ad valorem), a fixed amount per unit (specific), or a combination of both (compound). When people refer to "the Section 301 tariff" or "the 25% steel tariff," they are referring to the policy or rate schedule.
A duty is the actual dollar amount an importer pays based on the tariff rate applied to a specific shipment. If the tariff rate is 16.7% and your customs value is $10,000, the duty is $1,670. Duty is what appears on your CBP entry summary and what you wire to the U.S. Treasury.
In everyday usage, "tariff" and "duty" are often used interchangeably, and in most contexts that is fine. But when calculating costs, the distinction matters: you look up the tariff (the rate), then compute the duty (the amount owed) by multiplying the tariff rate by the customs value of your goods.
What are customs fees and how are they different from duties?
Customs fees are processing charges levied by U.S. Customs and Border Protection (CBP) on import entries. They are separate from duties and are not based on tariff policy. The two primary customs fees are the Merchandise Processing Fee (MPF) and the Harbor Maintenance Fee (HMF).
The Merchandise Processing Fee is 0.3464% of the customs value of the imported goods, with a minimum of $31.67 and a maximum of $614.35 per entry. Every formal commercial import entry incurs this fee. Informal entries (under $2,500) pay lower fixed amounts: $2 for automated entries and $6 for manual entries.
The Harbor Maintenance Fee is 0.125% of the value of cargo imported through U.S. ports by ocean vessel. Air freight shipments and overland imports from Canada and Mexico are not subject to HMF. These fees fund harbor maintenance and dredging operations managed by the Army Corps of Engineers.
Who is responsible for paying import duties and fees?
The importer of record is legally responsible for paying all duties, tariffs, and customs fees. The importer of record is typically the U.S. buyer or consignee named on the customs entry. Even if a foreign supplier agrees to cover duty costs contractually (as in DDP Incoterms), CBP holds the importer of record liable.
Duties and fees must be paid before goods are released from customs, or within 10 working days if the importer has a continuous bond. Most importers use a customs bond, which guarantees payment to CBP. Single-entry bonds cover individual shipments, while continuous bonds cover all entries for a 12-month period.
It is a common misconception that the exporting country or foreign manufacturer pays the tariff. Tariffs are paid by the U.S. importer and ultimately affect the price consumers pay for imported goods. The economic burden may be shared between the importer, exporter, and consumer depending on market conditions and pricing power.