china tarriffs on lcd monitors sold to china factory
Approximately 90 percent of all LCD modules are manufactured in mainland China. The remaining 10 percent are manufactured primarily between Japan and Taiwan, and some in Korea. China’s clear stronghold in manufacturing, coupled with its large volume of imports to the U.S., mean these tariffs will definitely impact the industry.
The US government said the tariffs where created in response to China’s Unfair Trade Practices. Specifically, the Section 301 investigation by the USTR revealed:
China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.
Unfortunately, while the USTR works to rectify inequities in these unfair practices, many American manufacturers will have to pay higher prices for their components. That works its way up the supply chain and can ultimately lead to higher prices for American consumers.
The USITC (Office of Tariff Affairs and Trade Agreements) is responsible for publishing the Harmonized Tariff Schedule of the United States Annotated (HTSA). The HTSA provides the applicable tariff rates and statistical categories for all merchandise imported into the United States; it is based on the international Harmonized System, the global system of nomenclature that is used to describe most world trade in goods. Although the USITC publishes and maintains the HTSA in its various forms, Customs and Border Protection is the only agency that can provide legally binding advice or rulings on classification of imports.
Many people are asking about using alternate HTC codes with lower burden implications. Unfortunately, these codes are abundant and complicated. There should be exactly one code that properly categorizes your product.
When a display is designed and built for a single application, it may be more appropriate to use a harmonized tariff code for the end-product instead of the display component. An LCD in a cellphone is a good example of this.
A popular way to do this is to reevaluate your current HTC codes and make sure they’re correct. This can be done with in-house council or the use of a consultant specializing in this area of the government. Ultimately, however, you need get a ruling from the government to be certain you are using the correct code.
Finding a tariff code by perusing the USTR HTC tariff code list can be overwhelming and risky. If the code is chosen incorrectly, it can lead to fines and penalties from the USTR.
Some companies are searching for key suppliers outside of the China region and working towards qualifications of those factories. Others are exploring having key components of the purchased assembly outsourced outside of China so it still satisfies the correct definition of Country of Origin. Again, violating these definitions can lead to costly fines and penalties.
TAIPEI (Reuters) - Taiwan’s Foxconn is exploring the sale of its new $8.8 billion display panel factory in China, people familiar with the matter told Reuters, as demand for the product wanes amid an intensifying U.S.-China trade war.FILE PHOTO: A motorcyclist rides past the logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan March 30, 2018. REUTERS/Tyrone Siu/File Photo
Foxconn, formally known as Hon Hai Precision Industry, is in talks to appoint banks to find a buyer for its liquid crystal display (LCD) factory that is being built in the southern Chinese city of Guangzhou, said two people with direct knowledge of the matter.
A sale would come at a delicate time for Foxconn, which has extensive investments in China, a large roster of U.S. clients that includes Apple Inc, and is having to navigate a tricky path amid the protracted trade war between Washington and Beijing. It would mark one of its largest divestments from China.
Foxconn’s discussions are at an initial stage and it has not yet come up with a price tag for the so-called Gen-10.5 facility specializing in large-screen LCDs, the sources said, adding a sale was not a surety.
Foxconn, in a written statement to Reuters, said: “As a matter of company policy, Foxconn does not respond to market rumors or speculation.” The sources requested anonymity because the deliberations are confidential.
U.S. President Donald Trump sharply raised the stakes in the bruising trade war with China and jolted global financial markets by vowing on Thursday to impose a 10% tariff on $300 billion of Chinese imports from September 1.
The trade war has disrupted technology global supply chains in a major way, forcing Foxconn to review its own. That and slowing demand for large-screen televisions and monitors had prompted Foxconn’s management to seek a buyer for the LCD plant, one of the sources familiar with the management’s thinking said.
Questions were also being raised within Foxconn on the need for the Guangzhou project. “Existing plants are already not running at full capacity ... why need another one?,” the source said.
The second source said the new factory would not go into production until early October, which makes it less appealing for buyers because of the additional risks as compared to an already operating plant.
The Nikkei daily reported earlier this year that the company would delay most of its planned production in Guangzhou for a minimum of six months, but Foxconn said the project was on schedule.
Dubbed the largest single investment ever in the southern city by Chinese media, Foxconn announced the Guangzhou plant in 2016, hoping to start operations by 2019 to meet an expected rise in demand for large-screen TVs and monitors in Asia in a challenge to top Chinese display maker BOE Technology Group.
The project was mainly run by a joint venture between the Guangzhou government and Japan’s Sakai Display Products, an advanced panel factory owned by Foxconn founder Terry Gou and Japan’s Sharp Corp, Foxconn’s display unit.
The Japanese panel maker said on Thursday it would build a plant in Vietnam to make flat screens and electronic devices to guard against additional U.S. import tariffs on Chinese goods.
The global display industry has been struggling with a supply glut and tumbling earnings due to moribund sales of televisions and smartphones, and the worsening trade dispute that could raise product prices and dampen consumer demand.
Taipei-based Foxconn said in April that it remained committed to building a display plant and tech research facilities in Wisconsin amid growing skepticism about the fate of the $10 billion project. Trump had cited Foxconn’s Wisconsin plans as proof he was reviving American manufacturing.
Prices for big-screen televisions and some household appliances could go up significantly if the Trump administration"s proposed tariffs on Chinese imports are enacted.
"On a $4,000 TV ... the tariffs might have a several-hundred-dollar price impact," said David French, senior vice president for government relations at the National Retail Federation, an advocacy group.
"We"re still assessing the list," French said. "There is machinery involved in consumer goods. ... There are chemicals listed that we believe are components of cosmetics and toiletries."
The Office of the U.S. Trade Representative proposed late Tuesday an additional 25 percent tariff on an extensive list of Chinese imports, valued at $50 billion for the year and ranging from aircraft parts to vaccines. A public hearing on the list is scheduled for May 15, and filing requests to appear and comment are due April 23.
"Some goods won"t be imported at all with a 25 percent tariff, but prices of domestic goods will go up the full amount of the tariff," said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington.
But he and other analysts pointed out that for a U.S. economy roughly $18 trillion in size, 25 percent tariffs on $50 billion of Chinese imports will have a relatively small effect overall on consumer prices.
Chinese manufacturer Haier, which acquired GE Appliances in 2016, "only imports a very small number of niche dishwashers designed for small spaces," spokesperson Kim Freeman said in an email to CNBC. "We make about 95 percent of our dishwashers in the U.S. in Louisville, Kentucky."
The National Retail Federation estimates that access to imported goods through free trade agreements boosts the purchasing power of the average American family by $18,000 a year.
"It"s going to be very difficult for the retailer to manage their supply chain in order to handle these tariffs," French said. "Consumers may be price sensitive enough that they may slow their holiday purchases. These may be "Grinch" tariffs."
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A couple weeks ago, after trade talks fell apart, President Trump raised tariffs on Chinese imports from 10% to 25%. The tariffs apply to a third of everything — about $250 billion worth of products per year — that we import from China.
The U.S. Trade Representative"s (USTR) tariff list starts with "Frozen retail cuts of meat of swine" and then continues for a couple hundred pages. China has already retaliated by announcing plans to jack up tariffs on about $60 billion worth of American stuff. Trump, in response, is now threatening to apply a 25% tariff on the remaining two-thirds of Chinese imports that aren"t on the U.S. list. That could mean a big tax on basically everything that the U.S. imports from China, with the exception of pharmaceuticals, some medical goods, and various minerals.
What happens to a good that is tariffed? How does the market respond? The ongoing live experiment in tariffs and trade is starting to yield some data. Last month, economists Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot published a study that provides evidence on the effects of recent tariffs. It"s all about washing machines.
In early 2018, after the American company Whirlpool complained about foreign competition, the Trump administration implemented tariffs on washing machines imported from all over the world. It"s a 20% tariff on the first 1.2 million washing machines sold a year and a 50% tariff on every one after that.
While these tariffs were imposed on foreign manufacturers, the study by Flaaen, Hortaçsu, and Tintelnot, like study after study before it, finds it"s ultimately U.S. consumers who pay. New washing machines in America got about 12% more expensive. That"s not too surprising.
What is surprising is that dryers also got more expensive even though they weren"t subject to the tariff. That"s because washers and dryers are in econospeak "complementary goods." They are more valuable together and are typically bought at the same time. "Before the tariffs, most manufacturers were pricing paired washer and dryer models at the exact same sticker price," Felix Tintelnot, a co-author of the study, says. "This pricing strategy was maintained after the tariffs... so the full effect of tariffs on prices is only visible after factoring in the price of the complementary good – dryers."
The clear losers in the study are Americans who needed to buy a washing machine or dryer in the last couple years. But, because the tariffs made foreign washing machines more expensive, it made American-made washing machines more appealing — and it convinced LG, Samsung, and Whirlpool to create about 1,800 jobs making washing machines and dryers in the US. Cool, right? Not really. After taking into account the extra money paid for these appliances because of the tariff, those 1,800 jobs ended up costing Americans about $815,000 per job every year.
It just adds another scoop of dirt on a mountain of evidence that tariffs are awful economics. It"s not just Republicans. One study that analyzed President"s Obama"s tariffs on Chinese-made tires found that they created about 1,200 jobs at a cost of about $900,000 a year per job. It"s why Douglas Irwin, a economist at Dartmouth who is one of the leading scholars of U.S. trade, calls tariffs "a really inefficient jobs-creation program."
But the tariffs that target only China aren"t even really a jobs-creation program for Americans. "So the big beneficiary here of the tariffs on China are Vietnam, Cambodia, and maybe for electronics, it would be Taiwan," Irwin says. "We"re not going to reshore a lot of this manufacturing. It"s just going to shift to other countries." Ironically, the true winners of a tariff war may be the bystanders. Call it collateral enrichment.
President Trump isn"t the first president to try tariffs. And tariffs have been much higher in American history. But Irwin, whose has written multiple books on this subject, believes this escalating trade war is "historically anomalous."
"We have the two world"s largest economies — which had been for the past 20 years very highly integrated — now all of a sudden kind of decouple from one another," Irwin says. "That"s a big break in terms of the history of the world economy and certainly the usual path of U.S. trade policy."
For trade economists, there is one upside. People call them for interviews more now. "Trade policy has been a very quiet field for economists because things change very slowly over time," Irwin says. "It"s been a little bit of a backwater but swamp has been drained and now we"re at the forefront of public policy discussions."
It’s hardly breaking news that we’re knee-deep in a trade war with China. How is this going to affect pricing on the computers, hardware, and tech equipment you’re buying this year and next? There’s a lot of speculation, but here’s what we think you should know about the situation as it develops.
Starting in July, the Trump administration ordered the US Trade Representative (USTR) to impose a tariff on $200 billion worth of imports from China. The latest round of tariffs took effect Sept. 24, 2018. USTR keeps a 200-page list of items updated which outlines materials and products subject to the tariff.
The bulk of the items listed by USTR are food items and raw materials. Most do not pertain to the finished systems and computer parts and hardware sold here at NeweggBusiness, save a few important ones that analysts expect to impact what we carry. Namely:
We do anticipate that several major OEMs will feel the effects of the tariff. They import a good amount of these types of electronic parts and components from China for assembly in North America. This will affect OEM production costs, which will subsequently affect market pricing. By levying a smaller tariff ahead of a more substantial one, the federal government incentivizes supply chain adjustments.
Since we don’t have visibility into every manufacturer’s supply chain, it’s difficult to know exactly. It’s safe to assume that OEMs will pass cost increase down to consumers. Several manufacturers have broadly warned our product teams preemptively. We have seen cost increases for enterprise storage and optical disk drives categories after USTR scheduled them in July.
Keep in mind that Chinese companies manufacture many—but not all—of the small components that wind up in finished systems. Parts also come from elsewhere in Asia: Taiwan, Singapore, Malaysia, Thailand, Japan, and South Korea. Because of that, we don’t expect to see pricing climb for every product across entire categories.However, do not be surprised if manufacturers raise prices on some SKUs as a result.
There are some knowable indicators as to which manufacturers use Chinese parts in assembling their electronics. For example, a recent study by the U.S.-China Economic and Security Review Commission shows that hardware made by Cisco, Dell, HP, IBM, Intel, Microsoft and Unisys sources components from China for more than half of its equipment.
Yes. OEMs work on slim margins and cannot afford to shoulder a 10-25 percent hit on a substantial part of their production costs. So it shouldn’t be surprise that a recent news published in CRN magazine states that Cisco Systems will raise pricing on nearly 3,000 of its SKUs between 6-10 percent due to US tariffs.
Do keep in mind that manufacturers and suppliers build list pricing so that end users do not feel the constant fluctuation endured in the supply chain. This is why the consumer market need not worry about global commodity prices for the raw materials from which switches and servers are fashioned. That said, end users can expect some insulation from the tariffs in that regard.
Additionally, it’s reasonable to assume manufacturers will likely end up changing list prices across the board rather than working in tariff pricing on some units and not others. It diffuses the impact of the action to a degree for the OEMs. Also, it simplifies the bookkeeping up and down the supply chain.
If you assume that about half of what ends up in finished products you use for IT comes from China, a 10-25 percent cost increase is substantial to the point that consumers will feel it. It’s not an emergency situation, so we’ll spare you the alarmist “buy now!” narratives. A word to the wise, though—wrapping up your year-end purchases before we get too deep into Q4 will probably save you a few bucks. Keep calm, carry on, and continue to work with your account executives for sourcing the products you need to get IT done.
It’s hardly breaking news that we’re knee-deep in a trade war with China. How is this going to affect pricing on the computers, hardware, and tech equipment you’re buying this year and next? There’s a lot of speculation, but here’s what we think you should know about the situation as it develops.
The latest round of tariffs, which hit goods ranging from from agricultural products like fruit, to consumer goods like furniture to industrial items like chemicals, went into effect on Monday. Economists expect that the items hit by the 10% tariff will increase in price, making those goods more expensive for US consumers and businesses.
The total value of the 5,745 items on the Trump administration"s list is just under $200 billion worth of Chinese goods. But, some of the goods weigh more heavily than others.
Using data from the US Trade Representative"s tariff list and the US Census Bureau"s database, the Trade News Centre broke down how much of each good was exported to the US from China in 2017 to determine the most important items that will get hit. We"ve then narrowed down the list to the imports of which the US bought at least $1.5 billion worth from China in 2017.
There were 14 items on the tariff list that topped $1.5 billion in import value last year with a hodgepodge of goods including auto parts, circuit boards, and chairs.
Included with each item is the common name for the goods, the value of 2017 imports to the US, the technical name for the goods in the harmonized system (an international classification system for goods in order to standardize trade), and the goods harmonized system code (which allows importers, exporters, and government officials to look up goods easily).
According to President Donald Trump, his recent conversation with the chief executive of Foxconn Technology Group was meant to persuade the world"s biggest manufacturer of made-in-China consumer electronics to keep its promise to build a mega-manufacturing complex in Wisconsin.
"Great news on Foxconn in Wisconsin after my conversation with Terry Gou!" Trump tweeted after the Feb. 1 call, which came only days after it was reported Foxconn was wavering in its commitment to the state.
Speaking to thousands of Foxconn employees at a Chinese New Year carnival in Taiwan, with Asian news outlets in attendance, Gou made clear that he and Trump spoke at length about the far bigger stakes of the U.S.-China trade war — even telling the throngs that he received an assurance from Trump.
"U.S. President Trump shared with me yesterday on the phone that the negotiation progress between China and the U.S. is going well, and it is likely that they will come up with an agreement soon," Gou said, according to Nikkei Asian Review.
Gou"s candor supports a view among trade analysts that Foxconn"s promise to build a flat-screen manufacturing complex in Wisconsin amounts to a bargaining chip in an economic conflict waged between Washington and Beijing — a politically sensitive trade war with hundreds of thousands of American jobs at stake, far more than the 13,000 that Foxconn promised would be created in Racine County.
“If you think foreign investment is one of the moving pieces (in the trade talks), it absolutely is," said Mary Lovely, an economist who specializes in international trade and investment at the Peterson Institute for International Economics in Washington, D.C.
The implied bargain is clear: Foxconn will keep alive its Wisconsin investment as long as Trump ensures Foxconn continues to have wide-open access to American consumers for its Chinese-made imports — and as long as Wisconsin taxpayers subsidize the project with the most expensive package of subsidies ever from a U.S. state to a foreign company.
Gou, 68, who founded Foxconn in 1974 and built a global empire of export markets, is known as a bare-knuckled negotiator. From a manufacturing base in mainland China, Foxconn supplies the world with iPhones for Apple and freighters full of other consumer electronics for the likes of Sony, Dell, Hewlett-Packard and brands known mainly in Asia. Gou has close ties to the Chinese Politburo.
As far back as 2017, when Trump unveiled Foxconn"s plans for Wisconsin, many analysts viewed the project as a hedge against the trade barriers Trump had threatened as a candidate.
As Trump rolled out his trade sanctions last year, triggering global trade wars in the process, "you’ll notice there have been no threatened tariffs on iPhones or other smartphones," observed Willy Shih, an economist at the Harvard Business School.
The Wisconsin facility was always driven by considerations other than pure business logic, analysts said. As Foxconn itself revealed last month, U.S. wages are too high to build TVs at a competitive price. No company ever attempted to build flat-screens outside Asia — much less in a part of the American Midwest better known for engine castings and Johnson Wax.
They"ve simmered throughout the 21st century as America"s seemingly insatiable appetite for affordable made-in-China goods has set records almost every year. The U.S. trade deficit in goods and services with China represents the biggest trade imbalance between any two nations on the planet — with no signs of slowing down.
In 2017, the latest year available, the bilateral trade gap widened to $335.7 billion, a figure that has grown exponentially since the late 1990s, according to data from the U.S. Commerce Department. The groaning trade gap has become an unofficial index of America"s manufacturing competitiveness even as a torrent of Chinese imports guarantee low prices for consumers at Walmart and other retailers.
The nation"s export weakness is a chronic political headache in Washington. Populist politicians blame cheap Chinese labor and lax Chinese environmental practices for the legions of manufacturing jobs that have vanished in the United States.
But slipping competitiveness and erosion of manufacturing employment defy easy political fixes. American politicians often talk tough but the Chinese have leverage in trade talks that Washington lacks: China has become one of America"s biggest lenders, effectively one of its biggest bankers.
America"s debtor status stems from its chronic trade imbalance. Americans import more than they export and consume more than they produce, just like a household that lives beyond its means. That’s shriveled the national savings rate. Americans routinely live with so much debt, in fact, that their unsustainable borrowing to buy homes was a major trigger for the searing financial crisis of 2008-’10.
All the while, the federal government mirrors the debt-dependent society that elected it: Washington chronically spends more (on roads, schools, subsidies and national security) than it ever manages to collect in taxes from a debt-dependent electorate. With debt spread across all levels of society, Americans collectively borrow from foreign lenders such as China to pay for the goods and services they otherwise couldn"t afford.
But the scope and abruptness of Trump"s trade barriers are unprecedented in the global age. He singled out China but didn"t stop there: The White House has imposed multiple rounds of tariffs, targeting all the world"s biggest trading blocs and economies, including all of North America; the 28-nation European Union; Japan, Russia and India.
China, the E.U., Canada, Mexico, India, Turkey and Russia retaliated with trade barriers of their own, all squarely aimed at the U.S. The world looked on last year as one market after another began to shut out imports. Trade slowed and global economic uncertainty grew. American manufacturers from Harley-Davidson to General Motors cried out in protest, blaming the trade war for killing American jobs.
Trump hasn"t backed down from his get-tough trade stance. "Nothing has been taken off the table," said Erica York, a trade analyst at the Tax Foundation, a conservative fiscal watchdog in Washington, D.C.
Because it does most of its manufacturing on the Chinese mainland, both Beijing and now Washington are pressuring Foxconn to create jobs — or at least to not slash existing ones. The pressure on Foxconn is real. Apple, Foxconn"s biggest customer, has been reporting a decline in demand for iPhones. Economic growth has slowed in China.
Just as worrisome, particularly for Wisconsin, is that new manufacturing facilities for flat-screen liquid-crystal display panels have proliferated in China and much of Asia, said Shih at Harvard. In southern China, Foxconn already is building a twin of the proposed Wisconsin plant, with identical or even greater research and production capacity. "There’s excess capacity that"s building," he said.
"The situation is darkening," said Levy. Early last year, Trump"s trade stance looked like rhetoric — "a lot of barking that would go away," he said. "Very quickly, Trump got himself into a position where this could be painful."
According to the Tax Foundation, about 167,000 U.S. jobs will vanish under the existing raft of Trump administration trade restrictions, York said. That number would more than double if new tariffs, currently threatened, are enacted, the foundation said.
Gou has been candid about the trade conflict. Speaking in December at a Chinese economic conference, Gou warned that the U.S.-China trade war may drag on for a decade. The once-regulated world of trade would shift "from globalization toward polarization," the CEO said.
With Asian journalists on hand Feb. 2, Gou described the U.S.-China trade conflict as a "major concern." The Foxconn chairman even disclosed to his workers that he flew to Washington in December for "an extensive discussion with the president about the outlook on the trade situation between the U.S. and China."
U.S.-China trade talks formally resume in March. They"ll be bogged down by complex issues involving cyber-security and the alleged Chinese theft of intellectual property from the U.S., as well as market access issues. "If no deal is reached," said York at the Tax Foundation, "all indications are that the U.S. would increase tariffs and that China would do the same."
Amid the welter of U.S.-led trade barriers, tariffs, duties and quotas, Shih at Harvard called the bilateral talks a "big three-dimensional chess game."
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Import costs from China have become a vital issue for many importers. By many metrics, China is one of the largest product manufacturers in the world. Due to China’s manufacturing reputation, many importers, large and small, turn here when they need to import products for their business. As a result, it’s crucial to have an in-depth understanding of the costs of importing from China.
Yes, there are a number of taxes, duties and other fees required when importing goods from China. Most notably, importers are required to pay import taxes, or customs duties, on imported goods, just like they would when importing from any other country.
Additional costs, like Section 301 tariffs and anti-dumping/countervailing duties (AD/CVD) are owed on specific products imported from China. There are also added costs like Merchandise Processing Fees, Harbor Maintenance Fees, and other miscellaneous costs that have to be taken into account when importing.
Customs duties are owed on nearly every product imported from China to the United States. This rule applies so long as the total value of the imported goods totals $800 or more (known as the De Minimis value). If the goods that you’re importing cost less than $800, they are not subject to duty or taxes (with the exception of goods like alcohol and tobacco).
In order to figure out how to calculate import duty from China to the U.S., you need to know your product’s HTS classification. Every internationally traded item can be classified using the International Harmonized System (HS).
Once you find an item’s corresponding HS code (or HTSUS if importing from the United States), you will find the tariff rate associated with that product. That code will then be listed on the commercial invoice.
In addition to the tariff rate, an HTS code will also indicate whether or not the U.S. has a trade relationship with any country for specific product imports. According to the U.S. International Trade Commission (USITC), tariff rates are broken up into three categories:
China falls under the “General” category. That means that the United States and China do not have a trade agreement in place. No special treatment is given on imports of goods from China to the U.S.A.
In addition to normal customs duties, a country may also impose additional tariffs on products imported from foreign countries. In the case of China, the U.S. has imposed Section 301 Tariffson thousands of goods.
Section 301 was signed in 2018 as part of an ongoing trade war between the U.S. and China. The signing imposed tariffs on $550 billion worth of commodities regularly imported from China to the U.S. The tariffs are broken up into four separate lists, each covering various goods and including exclusions and tariff rates.
Our team of Licensed Customs Brokers can help you determine all of the duties, taxes, and fees you"ll be required to pay and even find you ways to lower the costs.
If a foreign country is found to be “dumping” goods into the U.S. at a far lower cost than those goods are being sold in the U.S., antidumping duties will be put in place. The USITC is the organization responsible for implementing anti-dumping duties. Anti-dumping duties are imposed by taxing the goods in question at a far greater rate than the value of those goods.
Similarly, countervailing duties are placed on certain goods for similar reasons. Countervailing duties are implemented when export subsidies make the sale of certain products non-competitive for domestic industries.
According to Customs and Border Protection (CBP), another fee you’ll have to pay when importing into the U.S. is the merchandise processing fee. The amount you pay depends on whether or not the value of your shipment totals more than $2,500 (not including duty, shipping, or insurance fees).
For example, let’s say you have two separate shipments: one valued at $500, and the other at $3,800. Assuming the $500 shipment is manual, but not processed by CBP, you’d owe a flat rate of $6.66 for your merchandise processing fee. That would bring the total cost of your shipment, plus the MPF, to $506.66.
As for the $3,800 order, you would have to multiply the $3,800 by 0.3464, equaling $1,316.32. However, because this figure exceeds the maximum allowed MPF, your fee would be $538.40. That would bring the total cost of your shipment, plus MPF, to $4,338.40.
If your goods are shipped by sea, you’ll be required to pay a Harbor Maintenance Fee. The Harbor Maintenance Fee rate is 0.125% of the value of the imported cargo. There is no minimum or maximum HMF.
Additionally, this fee is charged for goods regardless of duty-free status. Harbor maintenance fees help cover the costs of maintaining ports and harbors around the country.
Many of the taxes and fees listed above are required in order to import from China. However, there are other costs you need to consider. While not always required, freight insurance is highly recommended, especially for high-value items or any items making a cross seas voyage.
Importers must also consider the cost of shipping, storage, and potential accessorial fees owed on the goods once they arrive at port. Federal excise taxes and sales taxes are also required on certain goods. It’s worth noting that value-added taxes (VAT rates) are not charged on imports from China to the U.S.
No matter what you’re planning to import, it’s important to keep in mind all of the potential costs that you may be responsible for before you make your purchase. Below, we’ll list some options available to help reduce import costs.
Do you need an import compliance manual for your business? Make sure that all of your bases are covered in the event of an inspection by CBP, especially if importing goods from a country impacted by an import ban like China. Read more about import compliance manuals and get help determining if it"s the right move for you.
There are multiple ways to reduce import costs when shipping from China. Ultimately though, the process comes down to getting professional advice and being able to do your own research. Some of the best ways to reduce import costs include:
A customs broker licensed by CBP can be an incredible asset when importing goods from China. Ways that a customs broker can help reduce import costs include:
Customs brokers are there to work for you and address all of your importing needs. Hiring a licensed professional is one of the most surefire ways to ensure that the proper procedures are being followed and to avoid or reduce any potential importing costs.
Our team of Licensed Customs Brokers can help you determine all of the duties, taxes, and fees you"ll be required to pay and even find you ways to lower the costs.
When looking to reduce import costs from China, one of the first steps you should take is to shop around for a supplier offering competitive rates. There are countless manufacturers competing for your business. If you don’t find a price or quality of product that meets your needs, simply shop around and screen suppliers until you do.
Some Resellers Advertise Themselves as Manufacturers:While this may not be an issue for many goods, it could create major issues for products that need to be custom-made or require detailed technical specifications.
If a Price is Too Good to be True, It Probably is:While it’s understandable that you would want to find the lowest prices you can, a price that is too low likely signals that the quality of the item is lacking. Shop around for a competitive rate, but be aware that you might get what you pay for.
Be Aware of Minimum Order Quantities (MOQs):Depending on the size of your business, the amount of product that you need to import may not always match up with a seller’s requirements. You may find a supplier that offers competitive rates, but they might require a large MOQ.
If the amount of product that you would have to order exceeds the benefit that you’d get from ordering from a cheaper supplier, it likely won’t be worth it. Shop around until you can find a supplier that meets your needs for both cost and order quantity.
Are any of the goods you import from China manufactured in or sourced from the Xinjiang region? Any goods or materials produced in the region are prohibited from entry into the U.S. Read our article on the Xinjiang import ban to find out more and avoid having your shipment fined and detained.
Another way to reduce import costs from China is to negotiate for Incoterms ® that meet your importing needs. Incoterms ® are mutually agreed-upon conditions between a seller and buyer.
There are 11 different Incoterms ® that can be negotiated. The most buyer-friendly option is Delivered Duty Paid (DDP). In a DDP agreement, the seller is responsible for all costs associated with the shipment, including transportation, insurance and even customs duties.
On the other hand, the most seller-friendly option is Ex Works (EXW). Under EXW, the buyer is responsible for all costs and risks associated with the shipment.
Many small businesses and importers shipping small orders choose EXW when importing. Oftentimes, it’s difficult to get a seller to agree to Incoterms ® that don’t directly benefit them. Instead, a buyer will choose to work with an experienced and reliable customs broker or freight forwarder. When working with a partner that strives to find the best prices and solutions to meet your needs, you can reduce import costs at every turn.
Remember, Incoterms ® are a negotiation. Both parties obviously want the terms that best suit their needs. As the importer, however, you’re unlikely to make that happen without compromising in other areas.
As a result, the most common Incoterms ® are Free on Board (FOB). Under FOB, the buyer and seller split costs 50/50. The seller assumes costs and risks up to the point that the goods are loaded onto the ship for departure. The buyer takes over from there, taking responsibility for the goods while on the ship or once they arrive at their destination.
Finding Incoterms ® that work for you is one of the best ways to reduce import costs from China. If you’d like to learn more, the International Chamber of Commerce (ICC) has a full list of incoterms ® available.
Whether you or your supplier handle the packing and logistics involved in shipping your goods, it’s important to keep in mind how the proper packaging can reduce costs.
In all likelihood, your products will be loaded onto a massive cargo ship with thousands of containers making their journey from China to the U.S. For those shipments, the name of the game is fitting as much cargo into a container - and as many containers onto a ship - as possible.
As a result, freight charges are often calculated based on the weight and volume that the cargo takes up. By consolidating your goods and packing them in an effort to fit more goods into fewer shipments, you can reduce import costs.
Our team of Licensed Customs Brokers can help you determine all of the duties, taxes, and fees you"ll be required to pay and even find you ways to lower the costs.
The short answer is: No, you can’t. When products are imported into the United States, there are always going to be taxes and fees that need to be paid. The closest option available to avoiding import costs would be to negotiate DDP Incoterms ® with your supplier. In that case, the supplier would be responsible for all transportation, insurance and customs duty costs.
However, it’s unlikely that you’ll be able to get a seller to agree to those terms. Even if you are able to obtain these terms, you’ll likely experience increased costs elsewhere.
When looking to reduce import costs from China, it’s crucial to do your research and calculate all costs you’ll be responsible for before you make your purchase. The main costs you’ll need to consider when making your calculations are:
Cost of Goods: Obviously, this will vary depending on the commodities you plan to import, the quantity you plan to import, and the supplier you choose to buy from.
Duties and Tariffs: To calculate the duty owed on imports from China to the U.S., the first thing you need to do is find your product’s HTS code. You can do this by using an HTS code lookup tool to find your product and its corresponding tariff rate. Additionally, check to see whether your product is subject to any AD/CVD or falls under Section 301 tariffs.
Transportation and Shipping: These costs will vary depending on the mode of transportation you use to ship your products (ocean, air, etc.), the port that your goods are departing from/arriving to, and the shipping company you choose.
The total cost for each of these expenses will always depend on you and your business needs. Once you determine the cost of each of these factors, you can add them together to calculate your total import costs.
New entrepreneurs and established import/export businesses, alike, turn to China when looking to import products into the United States. China is one of the top global options for product sourcing due to its quick turnaround time, high output and low cost of products.
In fact, according to the Office of the United States Trade Representative (USTR), China was the largest supplier of goods imported into the United States in 2020. Altogether, China totaled $434.7 billion and accounted for 18.6% of U.S. imports. The most imported products include:
China is also the U.S.’s seventh-largest supplier of agriculture products, totaling $3.8 billion in 2020. The most imported agricultural imports include:
Whether you’re an experienced importer or a new entrepreneur, navigating the world of customs clearance and global imports can be complicated and confusing. At USA Customs Clearance, we have the experience and know-how to help you buy and sell products internationally, and reduce costs while doing so.
Our Licensed Customs Brokers can guide you through every step of the import process. They can also help you register to become an Importer of Record. If you need to secure a customs bond, we can help with that too. You can even purchase a new importer bundle, which includes each of these options and more! Speak with one of our experts and get started importing today.
Our team of Licensed Customs Brokers can help you determine all of the duties, taxes, and fees you"ll be required to pay and even find you ways to lower the costs.
A couple weeks ago, after trade talks fell apart, President Trump raised tariffs on Chinese imports from 10% to 25%. The tariffs apply to a third of everything — about $250 billion worth of products per year — that we import from China.
The U.S. Trade Representative"s (USTR) tariff list starts with "Frozen retail cuts of meat of swine" and then continues for a couple hundred pages. China has already retaliated by announcing plans to jack up tariffs on about $60 billion worth of American stuff. Trump, in response, is now threatening to apply a 25% tariff on the remaining two-thirds of Chinese imports that aren"t on the U.S. list. That could mean a big tax on basically everything that the U.S. imports from China, with the exception of pharmaceuticals, some medical goods, and various minerals.
What happens to a good that is tariffed? How does the market respond? The ongoing live experiment in tariffs and trade is starting to yield some data. Last month, economists Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot published a study that provides evidence on the effects of recent tariffs. It"s all about washing machines.
In early 2018, after the American company Whirlpool complained about foreign competition, the Trump administration implemented tariffs on washing machines imported from all over the world. It"s a 20% tariff on the first 1.2 million washing machines sold a year and a 50% tariff on every one after that.
While these tariffs were imposed on foreign manufacturers, the study by Flaaen, Hortaçsu, and Tintelnot, like study after study before it, finds it"s ultimately U.S. consumers who pay. New washing machines in America got about 12% more expensive. That"s not too surprising.
What is surprising is that dryers also got more expensive even though they weren"t subject to the tariff. That"s because washers and dryers are in econospeak "complementary goods." They are more valuable together and are typically bought at the same time. "Before the tariffs, most manufacturers were pricing paired washer and dryer models at the exact same sticker price," Felix Tintelnot, a co-author of the study, says. "This pricing strategy was maintained after the tariffs... so the full effect of tariffs on prices is only visible after factoring in the price of the complementary good – dryers."
The clear losers in the study are Americans who needed to buy a washing machine or dryer in the last couple years. But, because the tariffs made foreign washing machines more expensive, it made American-made washing machines more appealing — and it convinced LG, Samsung, and Whirlpool to create about 1,800 jobs making washing machines and dryers in the US. Cool, right? Not really. After taking into account the extra money paid for these appliances because of the tariff, those 1,800 jobs ended up costing Americans about $815,000 per job every year.
It just adds another scoop of dirt on a mountain of evidence that tariffs are awful economics. It"s not just Republicans. One study that analyzed President"s Obama"s tariffs on Chinese-made tires found that they created about 1,200 jobs at a cost of about $900,000 a year per job. It"s why Douglas Irwin, a economist at Dartmouth who is one of the leading scholars of U.S. trade, calls tariffs "a really inefficient jobs-creation program."
But the tariffs that target only China aren"t even really a jobs-creation program for Americans. "So the big beneficiary here of the tariffs on China are Vietnam, Cambodia, and maybe for electronics, it would be Taiwan," Irwin says. "We"re not going to reshore a lot of this manufacturing. It"s just going to shift to other countries." Ironically, the true winners of a tariff war may be the bystanders. Call it collateral enrichment.
President Trump isn"t the first president to try tariffs. And tariffs have been much higher in American history. But Irwin, whose has written multiple books on this subject, believes this escalating trade war is "historically anomalous."
"We have the two world"s largest economies — which had been for the past 20 years very highly integrated — now all of a sudden kind of decouple from one another," Irwin says. "That"s a big break in terms of the history of the world economy and certainly the usual path of U.S. trade policy."
For trade economists, there is one upside. People call them for interviews more now. "Trade policy has been a very quiet field for economists because things change very slowly over time," Irwin says. "It"s been a little bit of a backwater but swamp has been drained and now we"re at the forefront of public policy discussions."
The fitness tracker and smartwatch maker Fitbit announced it will move manufacturing operations out of China to avoid tariffs asPresident Donald Trump"s trade war continues to sow uncertainty for many U.S. businesses.
"In 2018, in response to the ongoing threat of tariffs, we began exploring potential alternatives to China," Ron Kisling, the chief financial officer at Fitbit, said in a statement announcing the news on Wednesday. "As a result of these explorations, we have made changes to our supply chain and manufacturing operations and have additional changes underway."
"Based on these changes, we expect that effectively all trackers and smartwatches starting in January 2020 will not be of Chinese origin," Kisling added.
Tariffs on $300 billion of Chinese imports -- cell phones, laptops, video game consoles, toys, computer monitors among them -- are set to go into effect Dec. 15, after an initial delay.
GoPro CFO Brian McGee announced the company was "moving most of our US-bound camera production out of China" by the end of summer 2019, saying in a company statement that they believe "this diversified approach to production can benefit our business regardless of tariff implications."
Crocs also issued a statement in July saying the company would be exploring options to mitigate the effects of tariffs that also could include footwear made in China.
The year 2021 is a year of milestone significance in the history of the Communist Party of China and the People’s Republic of China. Under the strong leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping as the core, all regions and departments took Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guideline, fully implemented the spirits of the 19th CPC National Congress and the Plenary Sessions of the 19th Central Committee of the CPC and fostered the great founding spirit of the CPC. All regions and departments followed the decisions and arrangements made by the CPC Central Committee and the State Council, committed to the general working guideline of making progress while maintaining stability, fully and faithfully implemented the new development philosophy on all fronts, accelerated fostering a new development pattern, comprehensively deepened the reform and opening up, insisted on innovation-driven development, and promoted the high-quality development. We celebrated the centenary of the founding of the CPC, fulfilled the First Centenary Goal, and embarked on the new journey to achieve the Second Centenary Goal. While responding with composure to changes and the pandemic both unseen in a century, we have made new advances in fostering a new development pattern and pursuing high-quality development, and got off to a good start in implementing the 14th Five-Year Plan. China has maintained the leading position in the economic growth and the epidemic prevention and control in the world. National strategic capacity in science and technology accelerated its growth, industrial chain resilience was improved, reform and opening-up was advanced in depth, people’s livelihood was strongly and effectively safeguarded, and ecological conservation was carried forward. These are the results of the strong leadership of the Central Committee of the CPC with Comrade Xi Jinping as the core and the results of concerted efforts and hard work by the Party and the Chinese people of all ethnic groups.
According to preliminary estimation, the gross domestic product (GDP) [2] in 2021 was 114,367.0 billion yuan, up by 8.1 percent over the previous year with the average two-year growth [3] of 5.1 percent. Of this total, the value added of the primary industry was 8,308.6 billion yuan, up by 7.1 percent over the previous year, that of the secondary industry was 45,090.4 billion yuan, up by 8.2 percent and that of the tertiary industry was 60,968.0 billion yuan, up by 8.2 percent. The value added of the primary industry accounted for 7.3 percent of the GDP; that of the secondary industry accounted for 39.4 percent; and that of the tertiary industry accounted for 53.3 percent. The contribution of the final consumption expenditure to GDP growth rate was up by 5.3 percentage points, that of the gross capital formation to GDP growth rate up by 1.1 percentage points and that of the net exports of goods and services to GDP growth rate up by 1.7 percentage points. The per capita GDP in 2021 was 80,976 yuan, up by 8.0 percent over the previous year. The gross national income [4] in 2021 was 113,351.8 billion yuan, up by 7.9 percent over the previous year. The overall labor productivity [5] was 146,380 yuan per person in 2021, up by 8.7 percent over the previous year.
By the end of 2021, the total number of national population [7] reached 1,412.60 million, an increase of 0.48 million over that at the end of 2020. Of this total, urban permanent residents numbered 914.25 million. There were 10.62 million births in 2021 with a crude birth rate of 7.52 per thousand; and there were 10.14 million deaths with a crude death rate of 7.18 per thousand. The natural growth rate was 0.34 per thousand. The number of population who live in places other than their household registration areas [8] reached 504 million, of which 385 million were floating population [9].
At the end of 2021, the number of employed people in China was 746.52 million, and that in urban areas was 467.73 million, accounting for 62.7 percent for the total employed people, 1.1 percentage points higher than that at the end of the previous year. The newly increased employed people in urban areas numbered 12.69 million in 2021, 0.83 million more than the previous year. The surveyed urban unemployment rate in 2021 averaged 5.1 percent. The surveyed urban unemployment rate at the year end was 5.1 percent, and the registered urban unemployment rate was 3.96 percent. The total number of migrant workers [11] was 292.51 million, up by 2.4 percent over that of 2020. Specifically, the number of migrant workers who left their hometowns and worked in other places was 171.72 million, up by 1.3 percent, and those who worked in their own localities reached 120.79 million, up by 4.1 percent.
The consumer prices in 2021 went up by 0.9 percent over the previous year. The producer prices for industrial products went up by 8.1 percent and the purchasing prices for industrial producers up by 11.0 percent. The producer prices for farm products [12] dropped by 2.2 percent. In December, out of the 70 large and medium-sized cities, 53 cities experienced a year-on-year rise in sales prices of new commercial residential buildings and 17 cities experienced a decline; 43 cities experienced a year-on-year rise in sales prices of second-hand housing, one city maintained the same, and 26 cities experienced a decline.
At the end of 2021, China’s foreign exchange reserves reached 3,250.2 billion US dollars, an increase of 33.6 billion US dollars compared with that at the end of 2020. The average exchange rate of the year was 6.4515 RMB to 1 USD dollar, appreciated by 6.9 percent over that of 2020.
New industries, new forms and models of business gathered speed to grow. Among the industries above the designated size, the value added of the high technology manufacturing industry [14] increased by 18.2 percent over the previous year, accounting for 15.1 percent of that of all industrial enterprises above the designated size. The value added for the manufacture of equipment [15] was up by 12.9 percent, accounting for 32.4 percent of that of all industrial enterprises above the designated size. Among the service enterprises above the designated size [16], the business revenue of the strategic emerging service industries [17] went up by 16.0 percent compared with the previous year. In 2021, the investment in high technology industries [18] increased by 17.1 percent over the previous year. In 2021, the output of new energy vehicles reached 3.677 million, up by 152.5 percent compared with the previous year; and that of integrated circuits was 359.43 billion, up by 37.5 percent. In 2021, the online retail sales [19] reached 13,088.4 billion yuan, up by 14.1 percent over the previous year on comparable basis. In 2021, the number of newly registered market entities was 28.87 million with 25 thousand market entities newly registered per day on average. By the end of 2021, the market entities totaled 0.15 billion.
Solid progress was made in the coordinated development across urban and rural areas and different regions. By the end of 2021, the urbanization rate of permanent residents reached 64.72 percent, 0.83 percentage points higher than the end of 2020. By region [20], in 2021, the gross domestic product in the eastern areas was 59,220.2 billion yuan, an increase of 8.1 percent over the previous year; the central areas, 25,013.2 billion yuan, up by 8.7 percent; the western areas, 23,971.0 billion yuan, up by 7.4 percent; and the northeastern areas, 5,569.9 billion yuan, up by 6.1 percent. In 2021, the gross domestic product in Beijing-Tianjin-Hebei Region reached 9,635.6 billion yuan, up by 7.3 percent over the previous year; that in the Yangtze River Economic Belt, 53,022.8 billion yuan, up by 8.7 percent; and that in the Yangtze River Delta, 27,605.4 billion yuan, up by 8.4 percent. Major regional strategies such as the construction of Guangdong-Hong Kong-Macao Greater Bay Areas, the ecological protection of the Yellow River Basin, and the high-quality development were further implemented.
New achievement was made in ecological environmental protection. The national energy consumption per 10,000 yuan worth of GDP [22] in 2021 dropped by 2.7 percent over the previous year. Of the monitored 339 cities at prefecture level and above, 64.3 percent reached the air quality standard and 35.7 percent failed. The annual average concentration of particulate matter (PM2.5) was 30 micrograms per cubic meter, down by 9.1 percent over the previous year. Of the 3,641 sections under the national monitoring program for surface water, 84.9 percent were fairly clean water quality (Grade I to III), 11.8 percent were Grade IV, 2.2 percent were Grade V and 1.2 percent was worse than Grade V national standard.
In 2021, the sown area of grain was 117.63 million hectares, an increase of 0.86 million hectares compared with that in 2020. Of this total, the sown area of rice was 29.92 million hectares, a decrease of 0.15 million hectares; the sown area of wheat was 23.57 million hectares, an increase of 0.19 million hectares; the sown area of corn was 43.32 million hectares, an increase of 2.06 million hectares. The sown area of cotton was 3.03 million hectares, a decrease of 0.14 million hectares. The sown area of oil-bearing crops was 13.10 million hectares, a decrease of 30 thousand hectares; the sown area of sugar crops was 1.46 million hectares, a decrease of 0.11 million hectares.
The total output of grain in 2021 was 682.85 million tons, an increase of 13.36 million tons over the previous year, or up by 2.0 percent. Of this total, the output of summer crops was 145.96 million tons, up by 2.2 percent, and that of the early rice was 28.02 million tons, up by 2.7 percent. The output of autumn grain was 508.88 million tons, up by 1.9 percent. The output of cereal in 2021 was 632.76 million tons, up by 2.6 percent over 2020, among which the output of rice was 212.84 million tons, up by 0.5 percent; that of wheat was 136.95 million tons, up by 2.0 percent; and that of corn was 272.55 million tons, up by 4.6 percent.
In 2021, the output of cotton was 5.73 million tons, down by 3.0 percent over the previous year, that of oil-bearing crops was 36.13 million tons, up by 0.8 percent, that of sugar crops was 114.51 million tons, down by 4.7 percent, and that of tea was 3.18 million tons, up by 8.3 percent.
The total output of pork, beef, mutton and poultry in 2021 was 88.87 million tons, up by 16.3 percent over the previous year. Of this total, the output of pork was 52.96 million tons, up by 28.8 percent; that of beef was 6.98 million tons, up by 3.7 percent; that of mutton was 5.14 million tons, up by 4.4 percent; and that of poultry was 23.80 million tons, up by 0.8 percent. The total output of eggs was 34.09 million tons, down by 1.7 percent. The output of milk was 36.83 million tons, up by 7.1 percent. At the end of the year, 449.22 million pigs were registered in the total stocks, up by 10.5 percent compared with that at the end of 2020, and 671.28 million pigs were slaughtered, up by 27.4 percent over the previous year.
The total output of aquatic products in 2021 was 66.93 million tons, up by 2.2 percent over the previous year. Of this total, the output of cultured aquatic products was 53.88 million tons, up by 3.1 percent; and that of fished aquatic products was 13.05 million tons, down by 1.5 percent.
In 2021, over 0.46 million hectares of farmland were newly equipped with irrigation systems and another 1.88 million hectares of farmland was newly equipped with water-saving irrigation systems.
In 2021, the total value added of the industrial sector was 37,257.5 billion yuan, up by 9.6 percent over the previous year. The value added of industrial enterprises above the designated size increased by 9.6 percent. Of the industrial enterprises above the designated size, in terms of ownership, the value added of the state-holding enterprises was up by 8.0 percent, that of the share-holding enterprises up by 9.8 percent, that of the enterprises funded by foreign investors and investors from Hong Kong, Macao and Taiwan up by 8.9 percent and that of private enterprises up by 10.2 percent. In terms of sectors, the value added of the mining industry was up by 5.3 percent, that of manufacturing up by 9.8 percent and that of production and supply of electricity, heat power, gas and water up by 11.4 percent.
In 2021, of the industrial enterprises above the desi