What is the Process for Importing Goods into the U.S. ?

I met with a potential client on Friday to discuss a product from Brazil that she and her business partner are interested in importing. During our discussion it became clear that while on its face, the product itself is inexpensive, by the time all of the costs involved with importing the good into the U.S. are factored in, it’s a much more expensive venture.

As I drew out a diagram of the entire process, namely from the factory in Sao Paolo to their physical possession in New York City, I realized that though the seller had sent them information pertinent to the transaction, such as the cost of the goods per square meter, the tariff classification (up to the 8 digit level) of the product, and quotes for shipping a 20 ft. container on a vessel, I realized that though they possessed this information, there was no connection to the actual process of how this information translated into the importation of the product.

Therefore, I’d like to spell out some of the basics to importing into the U.S.
As each part of the process requires some detail, I will merely provide a brief introduction now, and through subsequent blog posts, describe each of the other facets to importation in greater detail.

U.S. Customs and Border Protection, formerly of the U.S. Treasury, and now a part of the Dept. of Homeland Security, is the agency responsible for overseeing imports into (and exports out of) the U.S. Whenever a product is imported into the U.S., it is “entered” into our borders upon “entry,” which is a declaration to the government of the article being imported and payment of the requisite duties to the U.S. government, which is essentially a tax on a product based on its invoice value at the duty rate. For example, if I import $1000 worth of merchandise and the duty rate is 5%, I am required to pay $50 in duties.

The duty rate is determined by a product’s tariff number, which is set out in the Harmonized Tariff Schedule of the United States. Countries which are members of the WTO (World Trade Organization) or those with whom the U.S. has a free trade (or other preferential) agreement, benefit from more favorable duty treatment than those who are not, which means that an importation from one of these countries will have a lower duty rate assigned to a product than one that is not.

Entry can be done by an importer and is typically done through a licensed Customs Broker, who through the use of a Power of Attorney, makes entry on behalf of the importer. The broker classifies the merchandise, determines its value and provides the requisite paperwork (invoice, packing list, shipping records, required declarations, etc.) to US Customs. Once the goods have been cleared by US Customs, they are admissible into the U.S.

Other importation issues, which I will discuss in future blog posts as each requires a bit of explanation, include:

• Obtaining a Bond
• Valuation
• Classification
• Marking (country of origin)
• Preferential duty treatment (free trade agreements)
• Other agency requirements (e.g., FTC – packaging statements like "biodegradeable"; FDA – declaration of food imports; CPSC – GCC re apparel and flammability and lead certifications of compliance; TTB – labeling of wine requirements; USDA/APHIS - when a product is considered an endangered species)
• Insurance (risk of loss)
• Transportation of the goods from the port to its final U.S. destination

Questions or comments? Email me at clark.deanna@gmail.com