Importing merchandise into the USA can be a bureaucratic nightmare.
We’ve all heard the horror stories of outrageous duties being charged, goods being confiscated and more…
...and if you want to avoid these crappy situations associated with importing, you’ll need to cover your bases and make sure you’re doing everything by the book.
Don’t worry - we’ve been dealing with importing for years, and we’ve figured out everything you need to be aware of.
Let’s walk through it, step by step.
First things first:
Unless you’re importing sensitive goods such as plants, animal or dairy products, medications, trademarked or copyrighted material and so on, you don’t need a license.
(For the full list of said goods, check out the customs website.)
Having said that, you will need a business tax number, which you can get through the IRS. This is the number to fill in on your paperwork which requests for an “importer number”.
The US Customs can be broken down into two parts.
Firstly, you’ll have to file the necessary documents to have your products released.
On top of that, you’ll also have to file additional documents for duty assessment.
The good news? You can do both of these online.
Go ahead and sign up for an ACE account.
Once that’s done, access the Automated Broker Interface program of the Automated Commercial Systems (whoa, what a mouthful!) to file your documents.
What happens next?
Upon receiving the documentation, the customs officials will decide if they want to examine your shipment.
If they do examine your goods, they’ll check to see that you aren’t violating any laws or regulations before releasing the goods.
Drugs, of course. Who do you think catches those heroin smugglers?
Jokes aside, the Customs officials do check for illegal narcotics - but they also look out for the following stuff:
Want to have your goods cleared quickly, so that you can get your hands on them ASAP?
The process goes much faster if:
How do you tell if your imported goods are subject to duty, or if they’ll be duty-free?
It all depends on their classification in the Harmonized Tariff Schedule of the United States.
It’s fairly easy to get all the information you need online:
Simply search for the type of item you’re importing at the USITC website. (You’ll need to create an account before you can search, but it’s totally free to do so.)
Some extra information on duties that you’ll want to know:
There are three types, or “rates” of duties that may be charged, which are…
Ad valorem rates are the most common duties you’ll find. These are charged as a percentage of the value of the merchandise (for example: 5% ad valorem).
Then there’s specific rates, which is a specified amount per unit of weight or other quantity (for example: 5.9 cents per dozen).
Last but not least, the compound rate is a combination of both an ad valorem rate and a specific rate (for example: 0.7 cents per kilo, plus 10% ad valorem).
Simple enough, right?
Also worthy of note:
Rates of duty for imported merchandise can also depend on the country of origin.
When referring to the Harmonized Tariff Schedule, you’ll notice two different columns: General and Statutory.
Here’s how they differ:
Goods covered by the General column are essentially goods which are imported from “most favored nations”. In humanspeak, this means countries who have a trade agreement with the US; goods from these countries are typically dutiable at lower rates.
In comparison, goods from other countries fall under the Statutory column, and these are dutiable at the full or “statutory” rates.
I’m assuming you’re importing your goods from China because, well, everyone’s importing their goods from China these days.
Here are your two options:
Firstly, have your supplier ship your goods straight to the Amazon FBA warehouses.
Secondly, have your supplier ship your goods to yourself (or another middle-man), before rerouting it to the warehouses.
Let’s talk about the first option: shipping direct.
By shipping direct, you save on transit time, and on paying a middleman.
But here’s the thing:
You won’t get to inspect your products before they get handed over to your customers.
Unless you’ve been working with the same supplier for, like, a decade, and you’re super confident that they can deliver, I’d say that this is a pretty big issue.
There are some things you can do to get around this, such as requesting that your supplier text you photos before sending out all shipments, and using a third party inspection company.
But at the end of the day, you’ll never be 100% sure that all of your customers are getting the right products, in the right size, and in the right colour.
Plus, there’s the possibility that your supplier will conveniently decide to stop doing business with you, and sell to Amazon directly instead.
Think about it:
You’re essentially giving your supplier a step-by-step guide on how to get started on Amazon FBA.
If it’s just ten or twenty items that you’re selling per month, nah, it won’t be enough to tempt your supplier.
But if you’re selling thousands of units or more?
You can bet your ass the gears in your supplier’s head will start turning. And when it comes down to it, there’s nothing that’s stopping them from cutting you out, and going directly to Amazon.
Okay, now for your other option.
Your supplier ships your products to a middleman, who in turn ships it to the Amazon FBA warehouses.
If you’re a small outfit and you don’t have large turnarounds, you might be able to eliminate the middleman, and take care of the rerouting yourself.
But if you’re a relatively established business with hundreds (or more!) orders coming in each month, it makes sense to hire a middleman, so that you can focus on the more strategic stuff.
Two great things about using a middleman is that…
Firstly, you can run a quality check on your products when they arrive.
Secondly, your middleman is likely to be an expert in packing products for Amazon FBA, which means that there’s an extremely low chance of your shipment being rejected by Amazon.
But there’s no such thing as a free lunch in this world…
...and when working with a middleman, you can expect to pay receiving fees, pick and pack fees, and labelling fees, all of which might add up to quite a bit.
The specific fees vary from company from company, but here’s an example of what you might expect to pay:
Make sure you factor these into your financial projections!
A word of advice?
Don’t get put off by the figures you see in documents such as the HTS.
Generally speaking, importing costs from China to US are very reasonable.
As long as you steer clear of restricted goods, and designer replicas (these are subject to more scrutiny, and may cause trademarking and copyright issues!), you should have nothing to worry about.
Plus, here’s another pro tip:
If you’re importing only small shipments, there’s a huge chance that they’ll the Customs will just wave you through.
Those folks are primarily interested in larger orders, and they normally can’t be bothered with smaller parcels worth $1,000 or less.
So start small for now - once you’ve gotten the hang of it, you can move on to importing larger shipments.
May you never be cursed with confisticated goods or horrendously delayed shipments. Fingers crossed!