How customs duty is calculated

Customs duty is the rate in the destination's tariff for the product's code, applied in one of four ways: as a percentage of the customs value (ad valorem), as an amount per unit (specific), as both added together (compound), or as a choice between the two with a minimum or maximum (mixed). Which way applies is written into each tariff line, so the code decides the method as well as the rate.

Rules as of 30 October 2026.

What are the types of customs duty?#

The types of customs duty differ in what they multiply. An ad valorem duty multiplies the customs value, a specific duty multiplies a quantity such as kilograms, liters or pairs, and compound and mixed duties combine the two. The examples below are real lines from the US, EU and Japanese tariffs in force on 30 October 2026.

Each line's rate is for goods without a trade preference. A preferential rate, an additional duty or a de minimis rule can change what a particular shipment pays.

How does ad valorem duty work?#

Ad valorem duty is a percentage of the customs value, and it is the most common form in every tariff. The amount rises and falls with the price, so the accuracy of the duty depends on the accuracy of the value: the real price paid, converted at the customs exchange rate, on the destination's valuation basis.

Ten cotton T-shirts worth $200 entering the United States under HTSUS 6109.10.00 pay 16.5% of $200, which is $33.00 of ordinary duty. The same shirts entering the EU pay 12% under CN heading 6109, charged on a customs value that also includes the shipping to the border. A product's rate varies a lot between tariffs:

General duty on cotton T-shirts (HS 6109.10)

border.bot live data from each country's official publications, updated 2026-10-18

How do specific and compound duties work?#

A specific duty is a fixed amount per unit of quantity, so the price doesn't matter: a cheap bottle of wine and an expensive one pay the same. A compound duty adds a specific part to an ad valorem part. Both need the quantity declared in the tariff's own unit, such as net kilograms or liters.

Still wine of up to 14% alcohol in bottles of 2 liters or less pays 6.3¢ per liter under HTSUS 2204.21.50. A case of 12 bottles of 0.75 liters is 9 liters, so the ordinary duty is 9 × $0.063 = $0.567, rounded to $0.57, whether the case is worth $100 or $1,000.

A men's wool overcoat under HTSUS 6201.20.11 pays 41¢ per kilogram plus 16.3%. For a coat weighing 1.8 kg and worth $300, that is 1.8 × $0.41 = $0.74 plus 16.3% of $300 = $48.90, a total of $49.64. On a dear coat the percentage does most of the work; on a cheap one the weight part matters more.

How do mixed duties with a minimum or maximum work?#

A mixed duty sets two ways of calculating and a rule for choosing between them: a cap the duty can't exceed, a floor it can't fall below, or the higher of two results. Customs works it out both ways on every shipment, so low-priced goods often end up paying a different method from expensive ones.

Chewing gum with less than 60% sucrose (EU CN 1704 10 10) pays 6.2% plus €27.10 per 100 kg net, at most 17.9% of the customs value.

Japan charges leather-strap footwear of subheading 6403.20 imported outside its tariff quota the greater of 30% or ¥4,300 per pair, its WTO rate. A pair worth ¥10,000 pays ¥4,300, because 30% would only be ¥3,000. A pair worth ¥20,000 pays ¥6,000, because 30% is now the higher figure.

What value is duty charged on?#

Duty is charged on the customs value, which under the WTO Customs Valuation Agreement is first of all the transaction value: the price actually paid or payable for the goods when sold for export. Countries choose whether that value includes transport and insurance to the border, which is the CIF or FOB difference.

The fallback methods when there is no transaction value

When there is no usable transaction value, for example for goods that weren't sold, the agreement sets the order of the other methods:

1. The transaction value of identical goods.
2. The transaction value of similar goods.
3. The deductive value, worked back from resale prices in the importing country.
4. The computed value, built up from production cost, profit and general expenses. The importer may ask for this one before the deductive value.
5. A reasonable method consistent with the agreement.

Article 8.2 of the agreement leaves each member to include or exclude, in whole or in part, the cost of transport, handling and insurance to the port or place of importation. That one choice splits the world's tariffs:

Worked example: the same order on CIF and FOB#

The same order pays different duty under the two bases, even at the same rate. Take goods worth 500 with 60 of freight and 5 of insurance to the border, and a 10% duty rate chosen to keep the arithmetic plain.

The CIF country also charges its import tax on a base that already holds the freight and the larger duty, so the gap widens once VAT is added. The landed cost guide runs a full example through both.

What else changes the duty a shipment pays?#

The tariff line's rate is only the starting point. Three things often change what a shipment pays: a lower preferential rate for goods that qualify as originating in a trade partner, additional duties tied to the product or its origin, and low-value rules that waive duty or replace it with a flat charge.

Cotton T-shirts of Vietnamese origin pay 0% in the EU instead of 12% when they meet the EU-Vietnam agreement's rules of origin and the entry carries proof; the trade agreements guide covers how claims work. In the United States, Section 232, 301 and 338 duties are added on top of the ordinary rate for listed products and origins, and the Section 232 guide covers metals, vehicles and the other sectors.

Low-value rules work the other way. The EU's €3 per item replaces the tariff rate on distance sales up to €150 until 1 July 2028, and other countries waive duty below a threshold, as the de minimis guide sets out.

Common questions#

Is customs duty charged on shipping costs?#

In CIF countries such as the EU, yes: transport and insurance to the border are part of the customs value. In FOB countries such as the United States and Canada, international shipping is left out of the value duty is charged on.

What is the difference between a specific and an ad valorem duty?#

An ad valorem duty is a percentage of the goods' value, so it changes with the price. A specific duty is a fixed amount per kilogram, liter, pair or other unit, so it changes with the quantity and ignores the price.

How do I find the duty rate for my product?#

Find the product's full tariff code for the destination, then read the rate on that line for the product's origin. The HS code lookup shows each country's lines and rates, and the landed cost calculator applies the rate together with any additional duties.

Sources#

• WTO: Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation Agreement) (opens in a new tab), World Trade Organization, 1994
• Harmonized Tariff Schedule of the United States, 2026 Revision 21 (opens in a new tab), U.S. International Trade Commission, effective 2026-10-09
• 19 CFR 152.102: definitions for valuation (opens in a new tab), eCFR, current as of 27 October 2026
• TARIC duties export, chapters 01 to 99 (opens in a new tab), European Commission, downloaded 2026-10-30
• Customs Tariff Schedules of Japan, chapter 64 (opens in a new tab), Japan Customs, edition of 2026-08-08
• Customs Act, section 48 (opens in a new tab), Justice Laws Website (Canada), current to 2026-09-30
• GST and other taxes (opens in a new tab), Australian Border Force, updated 2026-10-20
• Duty and allowances (opens in a new tab), New Zealand Customs Service, updated 2025-07-18
• Buying goods from outside the European Union (opens in a new tab), Revenue (Ireland), published 2026-07-01
• The temporary EUR 3 customs duty and the Union handling fee: guidance for Member States and trade (opens in a new tab), European Commission, version of 2026-10-05