The cost of a US import is the product price plus four further groups of cost: international freight and insurance, government charges (customs duty, any Chapter 99 additional duties, antidumping or countervailing deposits, the merchandise processing fee and, for ocean cargo, the harbor maintenance fee), and service charges (customs broker, Importer Security Filing, bond, examinations, port handling and delivery). Only the government charges are set by law. Freight and services are market prices you negotiate. And the government charges are calculated on the US customs value, which leaves out international freight and insurance, so they are worked out on a smaller number than the landed cost they end up in.
Sorting every cost into the right bucket is the useful part of a landed-cost model, because each bucket behaves differently when the order size, product or route changes.
| Bucket | What it contains | Who sets the amount | What it scales with |
|---|---|---|---|
| Value items | Product price, international freight, cargo insurance | Supplier, carrier, insurer | Product value; freight with weight or volume |
| Government charges | Base duty, Chapter 99 duties, AD/CVD deposits, MPF, HMF, certain commodity assessments and excise taxes | Statute, regulation, proclamation, Commerce orders | Mostly customs value; specific duties with quantity; MPF capped per entry |
| Service charges | Broker, ISF filing, bond premium, exam costs, terminal handling, drayage, warehousing, demurrage and detention | Service providers | Per entry, per shipment, per container, or per day |
Bucket 1: the product price, freight and insurance
The product price is what you pay the supplier under the agreed Incoterm. On FOB or FCA terms it includes the supplier’s costs to the port or carrier; on CIF or DDP terms it also contains freight and insurance that you are paying for indirectly.
For US customs, international freight and insurance are excluded from the dutiable value under 19 U.S.C. 1401a, whether you pay them directly or they sit inside a CIF price. Foreign inland freight is treated differently: if it is part of the price, it is usually dutiable unless it is separately identified and the goods were sold for export and placed with a carrier for through shipment, shown by a through bill of lading (19 CFR 152.103(a)(5)). The guide to Incoterms 2020 and customs value runs the same shipment through EXW, FOB, CIF and DDP.
For landed cost, all of these are real money and belong in the model. The point is only that duty is not charged on the freight.
Freight is the most volatile item in the model. It depends on the trade lane, the season, container or LCL volume, fuel surcharges and the carrier’s own surcharges. Use current quotes from your forwarder for the specific lane, never a generic range.
Bucket 2: government charges
These are the amounts that the law fixes once the facts (classification, origin, value, quantity, mode, entry date) are known.
Base duty comes from the HTSUS line for the product, in the column that matches the country of origin. It can be ad valorem (a percentage of value), specific (an amount per kilogram, litre or unit) or compound (both).
Chapter 99 additional duties sit on top of the base rate. They are reported with their own 9903 numbers alongside the product’s normal HTSUS number and are usually a percentage of the same customs value. A base rate of “Free” does not mean a product owes nothing.
Antidumping and countervailing duty deposits apply only where a Commerce Department order covers the product and country, and the rate depends on the producer and exporter. They can be many times the base duty.
The merchandise processing fee (MPF) is 0.3464 percent of the value of a formal entry, held between a minimum and a maximum per entry that change every 1 October (19 CFR 24.23). Informal entries pay a small flat fee instead. Goods that qualify under USMCA and most other US free trade agreements are exempt.
The harbor maintenance fee (HMF) is 0.125 percent of the value of commercial cargo unloaded at a covered US port (19 CFR 24.24). Air and truck shipments do not pay it.
Some goods carry further charges collected at entry: federal excise taxes on products such as alcoholic beverages and tobacco, and commodity promotion assessments such as the cotton research and promotion assessment on cotton and cotton-containing goods, charged per kilogram under 7 CFR 1205.510.
The step-by-step arithmetic for these charges, with the source of every figure, is in how to calculate US import duty.
What is not a government fee
The Importer Security Filing (ISF) is often listed with the government fees on quotations. It is a legal requirement, but CBP does not charge for it. Under 19 CFR part 149, the ISF importer or its agent must transmit eight data elements at least 24 hours before ocean cargo is loaded at the foreign port, and two more (container stuffing location and consolidator) no later than 24 hours before arrival in the US. The charge you see on an invoice is your broker’s or forwarder’s fee for filing it. The government cost appears only when something goes wrong: the bond condition for ISF provides for liquidated damages of $5,000 per violation (19 CFR 113.62(j)).
The same applies to the customs bond. CBP requires a bond before it releases goods on a formal entry (19 CFR 142.4), but the price you pay is a premium to a surety company, set by the surety.
Bucket 3: service charges
These are commercial prices. They vary by provider, port and complexity, so collect quotes and record them per shipment.
- Customs broker fees: usually a fee per entry, sometimes with extra charges per invoice line, per additional Chapter 99 line, for PGA (partner government agency) filings such as FDA, or for AD/CVD entries.
- ISF filing fee: per bill of lading, charged by whoever files.
- Customs bond: a single-entry bond is bought for one entry; a continuous bond covers all entries for a year. Regular importers usually find the continuous bond cheaper per entry.
- Examinations: if CBP selects a shipment for examination, the importer bears the cost of preparing the goods for it (19 CFR 151.6), which in practice means trucking to an examination station, devanning and labour, plus any storage while the exam is pending. There is no way to predict which shipments will be examined, so budget a contingency.
- Destination handling: terminal handling, container freight station charges for LCL cargo, chassis, drayage to your warehouse and unloading.
- Demurrage and detention: carrier and terminal charges per day once free time runs out. Delays caused by a late ISF, a classification query or an exam turn into these charges quickly.
- Payment and financing: letter of credit or collection fees, currency conversion and the cost of the money tied up in stock while it is in transit. How letters of credit and documentary collections work covers the instruments.
How each cost behaves when the order changes
This is where landed-cost models usually break. Some costs grow with value, some are fixed per entry, some move with weight or volume, and some depend on time.
| Cost | Grows with value | Fixed per entry or shipment | Grows with weight or volume | Grows with time |
|---|---|---|---|---|
| Ad valorem duty and Chapter 99 duties | Yes | |||
| Specific duty | Yes (per unit of quantity) | |||
| MPF | Yes, between minimum and maximum | Capped per entry | ||
| HMF | Yes | |||
| Ocean or air freight | Yes | |||
| Cargo insurance | Yes | |||
| Broker entry fee, ISF filing fee | Yes | |||
| Drayage, terminal and CFS charges | Per container or shipment | Partly (LCL by volume) | ||
| Demurrage, detention, storage | Yes |
Two consequences follow. First, small, frequent shipments carry a higher per-unit cost because the per-entry items (broker fee, ISF fee, the MPF minimum) repeat on every entry. Second, a cheaper supplier price lowers every value-based charge, while a cheaper freight rate lowers landed cost without changing the US duty at all.
A worked example: leather handbags from India by sea
The facts: 1,200 handbags with an outer surface of cowhide leather, made in India, bought at $28 each FOB Chennai, shipped LCL to New York. The freight, insurance and service amounts below are invented for illustration and are not market rates; replace them with your own quotes.
Classification first, because it decides the duty and here also depends on value. Handbags with an outer surface of leather fall in HTSUS subheading 4202.21. The 8-digit lines then split on unit value: at $28 each the bags are “valued over $20 each,” HTSUS 4202.21.90.00, general rate 9 percent. At $19 each they would be 4202.21.60.00 at 10 percent. None of the special programs listed for this line is currently available to Indian-origin goods (the GSP code “A” has been unusable since GSP expired at the end of 2020), so the column 1 General rate applies.
The Chapter 99 line in the table is an assumption, kept separate from the verified rates: suppose one additional duty of 10 percent applies. The dated section further down records what the HTSUS showed for Indian leather handbags when this article was checked.
| Bucket | Item | Amount | Basis |
|---|---|---|---|
| Value | Goods, 1,200 × $28 FOB Chennai | $33,600.00 | Commercial invoice |
| Value | Ocean freight, LCL (illustrative quote) | $2,100.00 | Forwarder quote |
| Value | Cargo insurance (illustrative) | $90.00 | Insurer quote |
| Government | Base duty, 9% of $33,600 | $3,024.00 | HTSUS 4202.21.90.00 |
| Government | MPF, 0.3464% of $33,600 | $116.39 | 19 CFR 24.23; inside FY2027 limits |
| Government | HMF, 0.125% of $33,600 | $42.00 | 19 CFR 24.24 |
| Government | Assumed Chapter 99 duty, 10% of $33,600 | $3,360.00 | Hypothetical; see the dated section |
| Service | Broker entry fee (illustrative) | $250.00 | Broker quote |
| Service | ISF filing (illustrative) | $40.00 | Broker quote |
| Service | Single-entry bond premium (illustrative) | $95.00 | Surety quote |
| Service | CFS and terminal charges (illustrative) | $300.00 | Forwarder quote |
| Service | Delivery to warehouse (illustrative) | $450.00 | Trucker quote |
| Landed cost with the assumed duty | $43,467.39 |
Without the assumed Chapter 99 line, landed cost is $40,107.39, or $33.42 a bag, about 19 percent above the $28.00 FOB price. With it, landed cost is $36.22 a bag, about 29 percent above. In the second case value items are $35,790.00 (82 percent of landed cost), government charges $6,542.39 (15 percent) and services $1,135.00 (3 percent).
The customs value is $33,600, not $35,790. Freight and insurance are in the landed cost but outside the base for duty, MPF and HMF. On a CIF purchase at the same total, the value would still be $33,600 once the actual freight and insurance were documented and deducted.
If the order doubled to 2,400 bags in one entry, the value-based government charges would double, the MPF would rise to $232.78 (still under the cap), but the broker fee, ISF fee and much of the delivery cost would not. Per bag, landed cost would fall even though the duty rate stayed the same.
Figures that change: status as of October 2026
The structure above is stable. These figures are not, and should be checked on the date of entry:
- MPF for fiscal year 2027 (entries from 1 October 2026): 0.3464 percent, minimum $34.58 and maximum $670.86 per formal entry; informal entry MPF $2.77 for an automated entry not prepared by CBP (CBP Dec. 26-14, 91 FR 48398).
- Additional duties: products of 60 economies, including India (10 percent) and China (12.5 percent), are subject to Section 301 duties for entries on or after 24 July 2026 under USTR’s forced-labour action (91 FR 47318), with product and economy exemptions in its annexes. Section 232 duties and the earlier China Section 301 duties also continue. Check the live HTSUS Chapter 99 for the lines that apply to your product.
- For the handbag example: on 17 October 2026 the HTSUS showed heading 9903.05.44 for products of India at “the duty provided in the applicable subheading + 10%”, except goods covered by exemption headings 9903.05.85 to 9903.05.92. The CBP exemption list issued with CSMS #69326983 on 23 July 2026 does not list 4202.21.90.00 under those headings, so on that date the 10 percent assumption matched the position for these bags. Recheck it for your entry date.
- Low-value shipments: CBP has indefinitely suspended the $800 de minimis exemption for shipments by all modes, by two rules published on 24 June 2026 (non-postal modes), and legislation enacted in July 2025 ends the exemption from 1 July 2027. Small commercial shipments now go through informal or formal entry and pay duty.
Common mistakes in landed-cost models
- Putting the ISF fee, the bond premium or the broker fee in the “government” line. They are service charges and should be negotiated as such.
- Calculating duty on the CIF value or on the landed cost. For US entries duty is calculated on the customs value, which excludes international freight and insurance.
- Leaving out Chapter 99 duties because the base rate is free or low.
- Applying a percentage MPF to every shipment without the per-entry minimum and maximum, or applying HMF to air freight.
- Forgetting time-based costs. An exam or a hold can add storage, demurrage and detention that exceed the duty on a low-value shipment.
- Using one average freight figure for every lane and season.
- Modelling duty from a supplier’s HS code without checking the US 10-digit line, origin and value thresholds. A wrong line changes every government charge after it. The audit-ready classification file is the record that supports the line you used.
Questions people ask
Do I pay US duty on the shipping cost?
Not on international freight and insurance. US customs value is the price paid for the goods when sold for export to the US, without the costs of the international shipment (19 U.S.C. 1401a). The EU and India work differently: both add freight and insurance up to the border before applying the duty rate, so the same shipment has a higher dutiable value there.
Is landed cost the same as customs value?
No. Customs value is the legal base for duty and most fees. Landed cost is a management figure that includes everything you pay to get the goods to your door, including freight, insurance, services and the duties themselves.
Can I lower the government charges legitimately?
The lawful routes change the facts the charges depend on: the origin (where the goods are actually made), the value (for example, invoicing non-dutiable items such as post-importation installation separately from the goods), qualification for a free trade agreement, duty drawback on re-exported goods, or a foreign-trade zone or bonded warehouse to defer or avoid duty on goods that leave the US. The classification itself is not a lever: under the General Rules of Interpretation a product has one correct line. Routing goods through a third country does not change origin unless they are substantially transformed there.
Landed-cost errors usually start with the classification and origin data. Surajit Roy works on HS and HTS classification questions for importers and exporters and can be reached through the contact page.
Sources
- USITC: Harmonized Tariff Schedule (HTSUS 4202.21)
- 19 U.S.C. 1401a, Value
- 19 CFR 152.103, Transaction value
- 19 CFR 24.23, Fees for processing merchandise
- 19 CFR 24.24, Harbor maintenance fee
- 19 CFR part 149, Importer Security Filing
- 19 CFR 113.62, Basic importation and entry bond conditions
- 19 CFR 142.4, Bond at time of entry
- 19 CFR 151.6, Expenses of examination
- 7 CFR 1205.510, Cotton research and promotion assessments
- CBP Dec. 26-14, Customs user fees for fiscal year 2027, 91 FR 48398
- USTR, Notice of Actions in Section 301 Investigations (forced labor), 91 FR 47318
- CBP, Section 301 Forced Labor HTS List (exemption lists issued with CSMS #69326983, 23 July 2026)
- CBP, Indefinite suspension of the de minimis exemption for all modes other than postal (24 June 2026)
- CBP, Indefinite suspension of the de minimis exemption for mail shipments (24 June 2026)
This article explains the law and practice in general terms. It is not legal advice on a specific product or shipment; for that, check the current official sources or ask a qualified adviser.