In 2010, during one of our first U.S. Customs Compliance seminars, U.S. Customs and Border Protection (CBP) identified the 5 most common mistakes to avoid when importing into the U.S., and interestingly enough, these are STILL the most common mistakes today.
Whether you are a U.S. manufacturer sourcing from China, purchasing completed goods for immediate sale, or acting as the non-resident importer (NRI) into the U.S., understanding these common mistakes and how to avoid them could save you a lot of time and money.
Mistake #1: Not Determining Your Customs Tariff Codes Correctly
The Harmonized Tariff Schedule determines the correct duty rate for your imported products. It is the foundation for your import compliance. Using the wrong code can mean you are underpaying or overpaying customs duties and taxes.
There are many ways to determine your customs tariff codes, some more reliable than others:
- Online tariff lookups
- Hiring a customs broker to classify the goods for you
- Applying for a binding ruling from CBP
Regardless of your method of determination, treat tariff classification like you would a medical condition. Rather than relying on a self-diagnosis obtained from the internet, some things are best left to the trained professionals!
Mistake #2: Misunderstanding Rules of Origin
There are standard rules of origin for all goods. When importing goods into a nation with which the U.S. has a trade agreement, such as the North American Free Trade Agreement (NAFTA), they may be eligible for reduced or eliminated duty. Something to note, however, the use of an FTA may result in additional rules of origin to qualify for preferential treatment.
NAFTA certificates list the originating nation of the goods and act as proof of the claim. You, as the importer of record (IOR), are responsible for the completeness and accuracy of the NAFTA certificate.
Mistake #3: Incorrect and Incomplete Country of Origin Marking
Legibly and permanently mark you imported goods with their country of origin. The country of origin may not be the same as country of purchase. Reference the U.S. Customs Regulation (19 CFR 134) to ensure compliance regarding markings and “J” list exemptions.
Pay close attention when reusing boxes. All previous markings must be eliminated to ensure that the correct country of origin markings are the only ones visible.
Mistake #4: Misunderstanding U.S. Customs Valuation
Delare the proper value of the imported goods to customs. Ensure you also calculate any deductions or additions. Support these adjustments with proper documentation at the time of entry.
Mistake #5: Using a U.S. Goods Returned Declaration for Non-American Goods
If you are importing goods back into the U.S., you can declare them as U.S. Goods Returned (USGR) to eliminate the duty… unless it turns out that they are not U.S. goods!
Declaration of Free Entry of Returned American Products requires you to provide appropriate documentation that goods were manufactured in the U.S. Maintaining a close relationship with your U.S. vendors may be helpful when it comes time to request an affidavit of manufacture to avoid paying duties on U.S.-made goods.
Final Suggestions by CBP
- If you are in doubt of whether or not your good is NAFTA eligible, do not claim it as such, and ensure that your customs broker does the same.
- If, after the fact, you find that you have made a mistake or a ‘false statement,’ notify CBP as soon as possible to ensure that you do not get penalized.
- Talk to your customs broker about the steps needed to disclose the scope of a discovered discrepancy. Some discrepancies can be corrected very quickly while others require more effort.
CBP does not want to be an impediment to doing business with the U.S. Avoid these 5 most common mistakes when importing into the U.S. and enjoy import success.