According to the Oxford Languages dictionary online, the origin of the term “Customs” was from late Middle English, as a singular term, denoting a “customary due” paid to an authority, and later a duty or fee levied on goods going to market. One oral tradition states that the captain of a ship upon arriving in a port would ask the harbormaster, “What is the custom?”, meaning what was the fee to be paid to the king.

The United States Customs Service was the first law enforcement agency founded by the federal government in 1789 and for over a century duties and tariffs on imports served as the primary funding source for government operations. Originally organized under the Treasury Department, in 2003 it was reorganized under the Department of Homeland Security as U.S. Customs and Border Protection (CBP), which reflects the agency’s change from being a source of revenue to securing the nation’s borders. According to one source, import duties now account for only 2% of U.S. government funding. (www.pgpf.org/finding-solutions/understanding-the-budget/revenues)

The Mission Statement for CBP reads, “Protect the American people, safeguard our borders, and enhance the nation’s economic prosperity.” Their focus has shifted from funding the government to a law enforcement function and regulating trade policy. Their Mission Priorities: Counter Terrorism, Combat Transnational Crime, Secure the Border, Facilitate Lawful Trade and Protect Revenue, and Facilitate Lawful Travel. (https://www.cbp.gov/about)

The Customs Territory of the United States incorporates the 50 states, the District of Columbia, and the Commonwealth of Puerto Rico.

“As a general rule, all merchandise imported into the United States is required to be entered, unless specifically excepted. Importation occurs when a vessel or aircraft laden with goods arrives within a port of entry with the intent to discharge its cargo, or upon arrival within the Customs Territory of the United States if by vehicle or train.” (https://www.cbp.gov/sites/default/files/assets/documents/2020-Feb/icp073_3_0.pdf)

For shipments not entered within 15 days of arrival, CPB can send them to a General Order warehouse. After six months, the goods can be seized by Customs, sold at auction, or donated to charity.

Goods are generally required to be cleared at the first port of arrival into the US Customs territory, but freight can also move from one Customs port to another by using a customs bonded carrier. For full containers, the ocean vessel will unload at the terminal, and the container will transfer to rail for movement to an inland destination where it can be picked up from the rail depot by a trucker for delivery. Smaller less-than-container-load shipments will usually transfer to a bonded warehouse for unloading from the container and move by bonded truck to a warehouse in a different city for clearance and pickup. Airfreight shipments can fly between the first airport of landing or move by bonded truck to another city for clearance.

This is the person or business who is the actual owner or purchaser of the goods being imported, but in some cases can also include a buying or selling agent, or a person who imports on consignment, under a loan or lease, for exhibition at a trade fair, or goods for repair or alteration or further fabrication. The importer can clear goods themselves, or they can engage a customs broker to clear on their behalf.

Customs brokers are highly trained and regulated professionals who have passed a written examination administered by CBP to receive a customs brokerage license, and are the only parties legally permitted to clear import shipments on behalf of an importer from whom they have received a Power of Attorney. Customs brokers utilize electronic filing software for submitting entries to Customs, can facilitate payment of fees to carriers and warehouses, and assist in arranging delivery of goods. Some brokers are also affiliated with international freight forwarders that can arrange the transportation of goods from overseas to the US.

In effect it is an insurance policy required by US Customs for the release of imported merchandise. This can be in the form of a Continuous (annual) bond covering all transactions over a 12-month period, or a single entry/transaction bond covering a single shipment. Surety companies provide a guarantee to US Customs that CBP will be paid in the case of default on any of the following Basic Import Bond Conditions to which the importer of record agrees to meet:

• Agreement to pay duties, taxes, and charges.
• Agreement to make or complete entry.
• Agreement to produce documents or evidence.
• Agreement to redeliver merchandise.
• Agreement to rectify any non-compliance with provisions of admission.
• Agreement to hold merchandise for examination.
• Agreement to reimburse or exonerate the United States.
• Agreement to use and handle duty-free merchandise in accordance with the law.
• Agreement to comply with CBP Regulations applicable to CBP security areas at airports.
• Agreement to comply with electronic entry and/or advance cargo information filing requirements.
• Agreement to ensure and establish the issuance of softwood lumber export permit and collection of export fees.

(https://www.cbp.gov/sites/default/files/assets/documents/2020-Feb/icp073_3_0.pdf)

The customs broker can facilitate the customs bond with a surety company to underwrite the importer’s entries. The importer will need to complete a bond application.

Duties: rates of duty depend on the country of origin of the merchandise and the Harmonized Tariff Schedule (HTS) number assigned to it. The full listing of the US HTS can be found at https://hts.usitc.gov/. Countries with Most Favored Nation trade status are subject to Column 1 regular duties, unless a special program or trade agreement exists for a particular country that may result in Free or reduced duty. Currently products from Russia, Belarus, Cuba, and North Korea are subject to Column 2 duties, which may be significantly higher than Column 1. Duties can be calculated three different ways:

• Ad valorem: a percentage of the dutiable value of the merchandise, for example Free or 5%.
• Specific: based on a particular quantity of the goods, like piece count or net weight. For example, some whiskbrooms of broom corn are subject to duties of 5 cents apiece, not based on value.
• Combination duty: a mix of ad valorem and specific duty. For example, Women’s wool knitted blazers are subject to regular duty of 54.8 cents per kilogram plus 16% of dutiable value.

There are also additional duties currently in place for a broad range of products manufactured in China (Section 301), and on certain steel and aluminum products from many countries (Section 232). Your customs broker can assist in advising which products are subject to these additional duties and if exclusions from these duties exist.

Merchandise Processing Fee: with some exceptions, this is paid on import shipments regardless of mode of transportation: 

• Percentage: 0.3464%
• Minimum per entry: $31.67
• Maximum per entry: $614.35
• Informal entries (generally shipments under $2500): $2.53

Harbor Maintenance Fee: paid on all ocean freight imports – this fee pays for harbor dredging by the Federal government. 

• Percentage: 0.125%, no minimum or maximum

IRS Excise taxes: additional taxes due on specific classes of merchandise, like tobacco and alcohol, which are collected by Customs.

There is no Value Added Tax into the US like there is going into some European countries.

Antidumping (ADD): duties imposed to counteract the effect of shippers or sellers of imported goods bringing in product at artificially reduced prices, dumping them into the U.S. market to the detriment of domestic manufacturers.

Non-reimbursement statement: a document required from the importer of record, which cannot be signed by a customs broker, certifying that the company is not receiving reimbursement of the antidumping duties from the seller or manufacturer of the goods. If this form is missing or not completed, or if the importer is receiving reimbursement, then U.S. Customs will charge double the normal antidumping duty.

Countervailing (CVD): duties imposed to counteract the effect of government subsidies to overseas manufacturers or industries that are able to offer goods at reduced price.

There are many cases where the same product is subject to both ADD and CVD. Careful review of the ADD and CVD cases should be performed when importing goods that may be subject to these duties. These cases can remain open for many years and final decision on the ultimate duty rate might not be determined by the U.S. Department of Commerce until well after the goods have been sold. Surety companies are exposed to increased risk when underwriting entries with ADD and/or CVD, and will require additional information and possible financial security in the form of a deposit or bank letter of credit.

Antidumping and Countervailing cases are brought when a U.S. company files a complaint with the U.S.  Department of Commerce that products are being imported at artificially low prices harming domestic industry, and the government initiates an investigation. Customs could be instructed to immediately begin withholding a deposit (effectively charging duties) for imports of the products, and sometimes even retroactively. When a final determination has been reached by Commerce, the duty rates can go up, down, or be removed – this process can take years. A positive determination of dumping or vailing would be reviewed annually, and rates can change retroactively for a review period. If an importer which has paid a deposit on previous entries goes out of business, U.S. Customs will file a claim against the surety company that provided the bond to pay any increased AD/CV duties that are due.

Duties and fees must be paid to US Customs within 10 business days from the date that the goods cleared Customs or late or non-payment penalties will be imposed by CBP. This can be done by check, payable to CBP, at the port of clearance. The more common, convenient, and secure method is electronic bank payment by Automated Clearing House (ACH). The customs broker can arrange for ACH payment through their account, which could incur an additional fee to the importer. Note that payment of duties to the custom broker does not relieve the liability to the importer of payment of duties to U.S. Customs in case the broker does not pay. The importer can apply for their own ACH account to have the duties and fees deducted from their back account directly, which allows for better accountability and tracking of payments. For importers on their own ACH account, the customs broker will still need to approve payments in time to avoid penalties, and they will provide a statement showing the entries and the amount due each day payment is made.

An importer with a continuous customs bond can also apply for Periodic Monthly Statement (PMS), which allows for deferred payment of duties to the following month. All entries cleared in a calendar month will be paid on the 15th business day of the next month. Payments must still be authorized within 10 days of customs release, and the broker will be able to advise the full amount to be withdrawn four business days before payment is made.

Commercial Invoice: the invoice must be in English or translated to English, and include the following information, per 19 CFR 141.86:

• Port of entry
• Date and place of sale, and the seller/manufacturer and buyer/importer of the goods
• Detailed description of the merchandise, to be able to determine the HTS#
• Quantity of each item
• Purchase price or entered value of each item
• Currency 
• Details of any charges included in the invoice value, including freight and insurance charges if included in the sales price
• Country of origin, which is defined as the country of manufacture, production, or growth, which may not necessarily be the same as the country of export.

Packing list: must state in adequate detail what merchandise is contained in each individual package

Bill of lading or air waybill: establishes ownership and right to make entry by the importer of record

Various products require different documents. All fabric and textile articles must include the full name and address of the manufacturing factory.

The Importer Security Filing (ISF) is a required declaration to US Customs at least 24 hours prior to departure from the last foreign port of lading which includes 10 required data elements from the importer, and two additional elements provided by the carrier (“10+2”). Importers should work diligently with their shippers overseas to ensure that ISF information is sent with enough time in advance of vessel sailing so the ISF can be filed in time. Late, missing, or incorrect ISF’s can incur Customs penalties of up to $10,000, for which the Importer of Record would be liable.

The 10 required ISF data elements on shipments for destination in the U.S. are:

• Seller name and address
• Buyer name and address
• Importer of Record number
• Consignee number
• Manufacturer or supplier name and address
• Ship to party name and address
• Country of origin
• Harmonized Tariff Schedule Number
• Container stuffing location name and address
• Consolidator name and address

If freight is intended for a foreign destination, either by the container remaining on the vessel when the vessel docks at a U.S. port, or if the freight will be exported in-bond after unloading at a U.S. port, then an ISF with 5 data elements will be required, as follows:

• Booking party name and address
• Foreign port of lading
• Place of delivery
• Ship to party name and address
• Harmonized Tariff Schedule Number

The carrier is responsible for transmission of two data elements to US Customs as part of the ISF process: Vessel Stow Plans and Container Status Messages.

If an ISF has not been filed for a shipment by the time the vessel has arrived at the port of unlading, the entire container will be placed on an exam hold by CBP, including if a shipment is small and part of a consolidated container. The hold will remain in place until the ISF is filed.

Non-containerized bulk and barge shipments are exempt from ISF requirements.

https://www.cbp.gov/sites/default/files/assets/documents/2023-May/ISF%20FAQ%202.0%20%28508%29.pdf

https://www.cbp.gov/sites/default/files/documents/import_sf_carry_3.pdf

Ocean shipments can be cleared up to 5 days prior to vessel arrival. Air shipments can be cleared when the freight has departed the final overseas airport flying directly to the United States (“wheels-up”). For goods that will move in-bond from one U.S. port to another, it is strongly recommended that customs clearance be submitted when the goods have departed the port of discharge, to avoid premature payment of duties which have to be paid within 10 business days after clearance.

Uyghur Forced Labor Prevention Act (UFLPA): importers are encouraged to fully investigate all steps in their overseas supply chain to ensure that no products entering the United States are made fully or in part by forced labor from any country. Products do not necessarily need to be considered “made in China” to be subject to refusal of entry under a Withhold Release Order (WRO) by CBP. Any component found to be made through forced labor could taint the overall product. This does not only affect China – there are currently WRO’s in effect for certain products from India, Japan, Malaysia, and Mexico, among others.

“U.S. federal law defines forced labor as all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer work or service voluntarily. Indentured labor is defined as work or service performed pursuant to a contract, the enforcement of which can be accomplished by process or penalties. This includes forced or indentured child labor.”

https://www.cbp.gov/trade/forced-labor#:~:text=What%20is%20Forced%20Labor%3F,offer%20work%20or%20service%20voluntarily.

A Carnet is an official document that allows for tax- and duty-free import and export of merchandise into and out of countries that accept Carnets. It has been described as a passport for merchandise. A Carnet is generally used for commercial samples, professional equipment, and trade show and exhibition goods, not for goods for sale or consumable/disposable goods. Electronic entry is not required for shipments covered by a Carnet.

There are other agencies of the federal government that have regulations that they enforce on imported products, with certain forms, certifications, and/or information submitted with the electronic entry to US Customs.

Food and Drug Administration: 

• Biologics
• Cosmetics
• Human Drugs
• Human and Animal Foods
• Medical Devices
• Tobacco Products
• Radiation-Emitting Products
• Animal Drugs and Devices
• Prior Notice of Imported Foods

U.S. Department of Agriculture: 

• Fruits and Vegetables
• Animal Products and Byproducts
• Propagative Material
• Seeds Not for Planting
• Cut Flowers
• Genetically Engineered Organisms
• Live Animals
• Products made of plants and wood under the Lacey Act
• Certain fruits, vegetables, shell eggs, and peanuts regulated by the Agriculture Marketing Service
• Certified Organic products

Environmental Protection Agency: 

• pesticides
• chemicals 
• composite wood products containing formaldehyde
• vehicles
• engines
• fuels

National Highway Traffic Safety Administration: 

• motor vehicles
• motor vehicle safety equipment

US Fish and Wildlife Service

• endangered species
• hunting trophies
• bone
• shell 
• antler
• certain meat products

Consumer Product Safety Commission: various consumer and children’s goods requiring a Certificate of Conformity

Drug Enforcement Agency: controlled substances and chemical components

Bureau of Alcohol, Tobacco, and Firearms