Customs, import duties, and tariffs
Import duties: who pays, how to calculate them, and how to reduce them
On import, customs duties are owed by the importer (the consignee), except under the DDP Incoterm where the seller bears them. They are calculated by applying a rate, set by the goods' HS code, to the customs value (generally the CIF value: goods + insurance + freight). VAT is then added on top of that total. To reduce the bill: classify your products correctly, use preferential origin agreements, and apply the right customs procedures.
Customs is often experienced as a black box by importers: a poorly anticipated cost line, shifting rules, and a topic made hot by the tariff instability of 2025-2026. Here are the principles that do not change, and the concrete levers for controlling the bill.
Who pays the customs duties?
On import, the party liable is in principle the importer, that is, the consignee of the goods. It is the importer who pays the customs duties and import VAT.
The major exception lies in the Incoterm chosen with the supplier:
- Under DDP (Delivered Duty Paid), it is the seller who bears the duties and taxes through to delivery.
- Under FOB, CIF, or EXW, it is the buyer who is responsible once the goods are imported.
The choice of Incoterm is therefore not just a transport question: it also decides who bears the customs cost and risk.
How duties and VAT are calculated
The calculation always follows the same logic:
- The customs value: most often the CIF value - price of the goods + insurance + freight to the EU border.
- The customs duties: you apply to this value the rate corresponding to the product’s HS code. This code (Harmonized System) is the decisive variable.
- Import VAT: calculated on the customs value plus the duties and certain costs.
In other words, two products of the same value can bear very different duties depending on their tariff classification. Hence the importance of classifying correctly.
The 4 levers to reduce exposure
- Classify correctly (HS code): an approximate classification often leads to overpaying, or exposes you to a reassessment. When in doubt, a Binding Tariff Information (BTI) secures the classification.
- Use preferential origin: free trade agreements allow reduced or zero duties when the goods meet the rules of origin. You still need the supporting documents.
- Use customs procedures: customs warehousing (deferring payment), inward processing (transforming before re-export), etc. - useful depending on your model.
- Check the customs value: make sure it is correctly established, neither overvalued nor undervalued.
An unstable tariff environment
Customs duties have also become a geopolitical issue. The reversals on US tariffs, the planned end of certain de minimis exemptions, and the ongoing disputes make the environment particularly volatile. Our Le Chargeur newsletter tracks these developments week after week - see the related editions below. The right posture is not to anticipate everything, but to keep a supply chain agile enough to absorb the changes.
The freight forwarder’s role
A freight forwarder able to handle customs clearance saves you on two fronts: it activates the reduction levers (classification, origin, procedures) and it anticipates clearance before the vessel arrives, which avoids demurrage and detention. At OVRSEA, customs management is integrated into the rest of the transport service, which avoids juggling several providers and smooths the arrival of goods.
To distinguish: the freight forwarder organizes the transport; the customs broker prepares the declaration. Many players, including OVRSEA, combine both functions - a point to check when choosing your partner.
FAQ
Who pays import tariffs, the importer or the supplier?
As a general rule, it is the importer, that is, the consignee of the goods, who is liable for customs duties and import VAT. The exception is the DDP Incoterm (Delivered Duty Paid), where the seller bears all duties and taxes through to delivery.
How do I calculate import duties and VAT?
You start from the customs value, most often the CIF value (price of the goods + insurance + freight to the border). You apply the customs duty rate corresponding to the product's HS code to obtain the duties. Import VAT is then calculated on the customs value plus the duties and certain costs. The HS code is therefore the key variable.
How do I reduce import duties?
Four main levers: classify the product correctly (a wrong HS code often leads to overpaying), use free trade agreements and preferential origin when the goods qualify, apply the right customs procedures (customs warehousing, inward processing), and check the declared customs value. A freight forwarder or customs broker helps you activate these levers.
How does a freight forwarder help with customs duties?
A forwarder that handles customs clearance classifies your products, prepares the declaration, calculates duties and VAT, anticipates clearance before arrival to avoid demurrage, and advises you on the procedures and agreements that reduce exposure. This avoids juggling multiple providers and smooths the arrival of the goods.
How do I classify my product HS code correctly to avoid overpaying duty?
The HS code (Harmonized System) determines the duty rate applied. An approximate classification can cause a lasting overcharge or a risk of reassessment. Rely on the customs nomenclature, request a Binding Tariff Information (BTI) if needed, and have the classification validated by a customs broker.