Customs and shipping glossary
Short definitions of the terms that decide what a parcel pays at the border, with links to the full guides.
Updated
- Anti-dumping and countervailing duties
Extra duties on specific products from specific countries, and sometimes from specific manufacturers, that offset dumping (selling below normal value) or foreign subsidies. They are charged on top of the normal rate, which is why the same HS code can cost more from one origin than from another.
- Binding ruling
A written decision by a customs authority on how a specific product is classified, which that authority then has to apply to it. Examples are CBP rulings in the US (searchable in CROSS), Binding Tariff Information (BTI) in the EU and Advance Tariff Rulings (ATaR) in the UK.
- CN code (Combined Nomenclature)
The EU’s 8-digit product code. The first 6 digits are the HS code and the last 2 are EU subdivisions. The CN sets the EU’s customs duty rates.
- Commodity code (UK)
The UK’s product code in the UK Trade Tariff: 10 digits for imports and 8 for exports. The first 6 digits are the HS code.
- Country of origin
Where goods were made, or where they last went through a substantial change, under the importing country’s rules of origin. It decides the duty rate and any extra duties. It is not the country the parcel ships from.
- Customs value
The value duty is calculated on, usually the price paid for the goods (the transaction value). The EU and the UK add transport and insurance to the border (a CIF basis); the US and Canada leave international freight out.
- DAP (Delivered at Place)
An Incoterms rule: the seller delivers to the named destination, and the buyer pays the import duty and taxes and handles import clearance. For parcels, that usually means the customer pays the carrier on delivery.
- DDP (Delivered Duty Paid)
An Incoterms rule: the seller handles import clearance and pays the import duty and taxes, so the customer pays nothing on delivery. Ecommerce sellers usually collect the amount at checkout.
- De minimis
A value below which a country waives duty, tax or both on an import. Thresholds differ by country and change: the US suspended its $800 duty exemption on 29 August 2025, and since 1 July 2026 the EU charges €3 per tariff classification on parcels worth up to €150.
- Duty (customs duty)
A tax on imported goods, set by the tariff line for the product’s code and country of origin. It can be a percentage of the customs value (ad valorem), an amount per unit or weight (specific), or both (compound).
- Formal entry (US)
The full US customs entry, generally required for shipments worth more than $2,500 and for some goods at any value. It needs a customs bond and is usually filed by a licensed customs broker.
- General Rules of Interpretation (GRI)
The six rules, applied in order, that decide which heading and subheading of the Harmonized System a product belongs to. Most products are classified under Rule 1: the wording of the headings and the section and chapter notes.
- HS code (Harmonized System code)
A 6-digit product code from the Harmonized System, maintained by the World Customs Organization and used by most countries as the basis of their tariffs. Countries add digits for their own tariff lines, such as the 10-digit US HTS code.
- HTS code (Harmonized Tariff Schedule of the United States)
The US 10-digit product code, published by the US International Trade Commission. The first 6 digits are the HS code, the first 8 set the duty rate, and the last 2 are for statistics.
- Import VAT and GST
Consumption tax charged on imports at the destination’s rate, such as VAT in the EU and the UK or GST in Canada and Australia. It is usually calculated on the customs value plus duty, so duty raises the tax too.
- Incoterms
Standard trade terms from the International Chamber of Commerce (the current set is Incoterms 2020) that say who pays for and handles transport, insurance and customs. DDP and DAP are the two that matter most for parcels.
- Informal entry (US)
A simplified US customs entry for most shipments worth $2,500 or less. With de minimis suspended, low-value courier parcels use it, and since 24 July 2026 parcels sent by post use CBP’s postal informal entry process.
- IOSS (Import One-Stop Shop)
An EU scheme for collecting VAT at checkout on goods sent to EU consumers in consignments worth up to €150. The registered seller declares and pays the VAT monthly in one EU country, and the parcel clears without VAT being charged again.
- Landed cost
The full cost of getting goods to the buyer: the price, shipping and insurance, plus duty, import taxes and fees. It is what the customer pays in total, at checkout or on delivery.
- Merchandise processing fee (MPF)
A US CBP fee on imports. Formal entries pay a percentage of the value, with a minimum and a maximum; informal entries pay a smaller flat fee.
- Preferential origin
Origin that qualifies goods for a lower or zero duty rate under a trade agreement, such as USMCA or the EU–UK Trade and Cooperation Agreement. The goods have to meet that agreement’s rules of origin, and the importer usually needs proof.
- Section 321
The US de minimis provision (19 U.S.C. 1321), which let shipments worth $800 or less, imported by one person on one day, enter free of duty. It has been suspended for goods from every country since 29 August 2025, and a 2025 law ends it on 1 July 2027.
- TARIC code
The EU’s integrated tariff code: 10 digits that add EU measures, such as anti-dumping duties, tariff suspensions and quotas, to the 8-digit CN code.