Customs Value Explained: How Your Duties Are Calculated
Founder, USTariffCalc.com · LinkedIn
Customs value is the base amount on which all US import duties are calculated. Get it wrong — too low or too high — and you either underpay duties (a violation with serious penalties) or overpay. The calculation has specific rules that many importers misapply.
What Is Customs Value?
Customs value is the price CBP uses to calculate your import duties. In most cases, it's the transaction value — what you actually paid or will pay for the goods. But it's not just the product price. Certain costs are added and others can be deducted.
What's Included
Product purchase price: The price on your commercial invoice.
In brief
- →Customs value = transaction value + international freight + insurance (CIF basis)
- →Assists (free tooling, designs provided by the buyer) must be added to customs value
- →Related-party transactions require arms-length price validation or alternative valuation methods
- →Undervaluing goods is a customs violation — penalties can reach 4× the unpaid duties
Shipping to the US: International freight charges to the port of entry.
Insurance: Cargo insurance for the shipment.
Assists: Tools, molds, dies, or engineering work you provided to the manufacturer to produce the goods.
Royalties and license fees: If you pay royalties as a condition of the sale.
Packing costs: The cost of containers and coverings.
What's NOT Included
Domestic freight: Shipping from the US port to your warehouse is NOT part of customs value.
Buying commissions: Fees paid to your own purchasing agent can be deducted.
Post-importation costs: Installation, assembly, maintenance after arrival.
International freight discounts: If you get below-market shipping rates, use the actual rate paid.
Common Customs Value Mistakes
Including domestic freight: Many importers accidentally include US trucking costs, inflating their customs value and paying more duty than necessary.
Not deducting buying commissions: If you pay a sourcing agent in China, that fee is generally deductible from customs value.
Using estimated shipping costs: Always use actual freight costs, not estimates. Overestimating shipping increases your customs value and your duty bill.
Calculate Duties Based on Your Customs Value
Landed Cost Calculator →Frequently Asked Questions
Is customs value the same as invoice value?
Usually yes, but customs value may also include shipping, insurance, and assists. It's the total transaction value plus applicable additions.
Can I reduce my customs value legally?
Yes. Ensure you're not including non-dutiable costs like domestic freight and buying commissions. Use actual shipping costs, not estimates.