How do tariffs get paid?

As the global trade story continues to evolve, we’ll be sharing some simple guides to some of the key terminology and processes you might want to know more about. This week, we’ve got a quick guide to how global tariffs are calculated and paid.

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Payoneer Team

Who pays them?

The tariff is paid by the businesses who import products into their country from overseas โ€“ essentially adding an extra cost to foreign products which, in turn, can make them more expensive for exporters, importers, the end consumer, or a combination of them all. 

Who takes the payment?

These importers have to pay the tariff to the custom authority in their country โ€“ for example, Customs and Border Protection (CBP) in the US, The Australian Border Force (ABF) or His Majestyโ€™s Revenue and Customs (HMRC) in the UK. A countryโ€™s customs authority is responsible for controlling the flow of goods across borders and enforcing customs laws, including the collection of tariffs. 

When does the payment happen?

Usually, imported products will need to clear through customs before they can be officially brought into the country. Clearing customs is the process where officials will examine the goods being imported, check their paperwork and assess their value. In most countries, tariffs must be paid before goods are released from customs. 

How long does it take for goods to clear customs?

It depends on a lot of different factors, and times can vary depending on whether the goods arrived in the country via air or sea, and the type of goods being imported (for example, pharmaceuticals are subject to strict regulations and may require extra approvals). 

The accompanying paperwork also impacts the speed with which the shipment is cleared โ€“ and documents that are incomplete, inaccurate or missing are a common cause of delays in customs. 

How is the payment calculated?

The importer is responsible for declaring the correct tariff classification and value of the goods in their customs documentation. Customs authorities then review the paperwork accompanying any imported products to determine what tariff needs to applied and the value of the goods.  

The tariff that needs paying is based on the declared value of the goods, their country of origin and harmonized system (HS) codes that are used by customs authorities to classify different kinds of traded products. 

From all this they can then calculate the tariff owed and collect payment from the importer. 

 

Weโ€™ll be following the global trade news closely, so look out for more articles explaining some of the key terms in the story. 

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The information in this document is intended to be of a general nature and does not constitute legal advice. While we have endeavored to ensure that the information is up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or suitability of the information. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever incurred in connection with the information provided.

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