You find a product on Alibaba for $3. You sell it on Amazon for $20. Looks like a 6x markup. Then someone mentions tariffs and suddenly you are not sure if you are making money at all.
That confusion is normal — and fixable. US tariffs on many Chinese goods are real, significant, and difficult to ignore. But they are also predictable once you understand the system. This guide explains how it works in plain terms, and how to make sure your product is still profitable before you place your first order.
Every commercial product imported into the US must be classified under an HTS code — a 10-digit number from the Harmonized Tariff Schedule. Think of it as a product ID for customs. It determines two things:
Your regular duty rate: Every product has a regular duty rate that applies regardless of where it comes from. For many consumer goods, the regular duty may be low, moderate, or zero, depending on the HTS code.
Your Section 301 tariff: Since 2018, the US has applied additional tariffs specifically on Chinese goods. Depending on the HTS code and current tariff action, the additional China tariff may be 7.5%, 25%, or higher. This adds on top of the regular duty.
If your product has a regular duty of 10% and a Section 301 tariff of 25%, you may pay a combined 35% duty on the customs value, before adding other import fees and logistics costs.
You are legally responsible for getting this right. Not your supplier, not your freight forwarder — you. If the code is wrong, CBP can assess back duties and penalties. Always verify your HTS code with a licensed US customs broker before placing an order.
Most new importers calculate profit like this: sell price minus product cost. That is not how importing works.
Your real cost is the landed cost — everything it takes to get one unit from the Chinese factory to your US warehouse. Here is what that looks like for 1,000 ceramic mugs at $2.00 FOB Shenzhen. This is a simplified example — actual duty depends on the exact HTS code, customs value, and current tariff status:
| Cost | Amount |
|---|---|
| Product (1,000 × $2.00) | $2,000 |
| Ocean freight | $500 |
| Port, brokerage, and bond fees | $450 |
| Regular duty (10%) | $200 |
| Section 301 tariff (25%) | $500 |
| MPF and other CBP fees | $60 |
| US inland freight | $300 |
| Total landed cost | $4,010 |
| Per unit | $4.01 |
That $2.00 mug costs $4.01 to land. The tariffs alone — $500 — added $0.50 to every unit. If you were selling at $7 thinking you had a $5 margin, you actually have a $2.99 margin before Amazon fees, returns, and advertising.
Do this calculation before you order. Every time.
Tariffs do not kill all products equally. It depends on your margin.
A product with a 25% Section 301 tariff and a 20% gross margin is a losing business. The tariff wipes out the margin before you spend a dollar on ads.
A product with a 25% Section 301 tariff and a 60% gross margin still works — the tariff takes a bite but leaves room to run a business.
This is why experienced importers have moved toward more differentiated, branded, or specialized products since 2018. Generic commodity goods with thin margins got hit hardest. Unique products with real value — where customers are not just comparing on price — absorb tariffs much better.
One of the cleanest ways to improve tariff economics: identify products with lower total duty exposure before you commit to them. During product research, look up the HTS code before you get excited about the product. If it has low total duty exposure, that is a real competitive advantage.
One underused strategy is tariff engineering — legally modifying a product so it falls under a different HTS classification with a lower tariff rate.
This is not a trick. It is legitimate product design.
Here is how it works in practice. A brand sells travel bags. Their main product — bags with an outer surface of leather — falls under an HTS code with a 25% Section 301 tariff. That eats into margin significantly at their price point.
Their customs broker points out that a different outer material may fall under a different HTS code with lower total duty exposure.
The brand redesigns the exterior to nylon. Same size, same functionality, slightly different material. The bag still looks premium and sells at the same price. Their duty exposure may drop significantly if the new material and classification are confirmed with a customs broker before any tooling is committed.
This only works if the modification genuinely changes the HTS classification. It must be a real design change — not a labeling trick. A customs broker confirms it before any tooling investment is made.
When buying from a Chinese supplier, you will agree on shipping terms — the Incoterm. For many US importers, FOB terms with China suppliers is usually the cleaner starting point.
Under FOB (Free On Board), your supplier handles the main origin-side export work in China, including inland movement to the named port and export clearance. You take responsibility once the goods are on the ship. Under EXW, you handle all of that from overseas. That is significantly harder and riskier.
FOB gives you a clean, predictable handover point. Your freight forwarder takes over from there.
You need a customs bond. For any commercial shipment over $2,500, a US customs bond is mandatory — it guarantees CBP that duties will be paid. A continuous bond is often more economical for regular importers than buying a single-entry bond each time.
ISF filing is time-critical. For ocean freight, your customs broker must file an Importer Security Filing (ISF) with CBP at least 24 hours before your cargo is loaded in China. Late or inaccurate ISF filings can lead to CBP penalties, commonly cited at up to $5,000 per violation. This is one reason your customs broker needs to be in the loop early — not after the ship leaves.
Your documents need to match. Three documents drive customs clearance: the commercial invoice, the packing list, and the bill of lading. The commercial invoice and packing list must be consistent — quantities, product descriptions, values, weights, and shipping details should align across all documents. Document discrepancies can increase the risk of delays, questions, or examination by CBP.
CBP can exam your shipment. A customs exam can range from a quick X-ray scan to a more intensive inspection or full unload that can hold your shipment much longer. You pay for the exam. The duration depends on the exam type, port, and whether documentation issues are involved.
An Amazon seller sources phone cases from Shenzhen. Unit cost $1.50, selling at $8.99, looks like a solid margin. They check with their supplier on the HTS code — the supplier gives them a code with a 7.5% tariff.
The shipment arrives. CBP questions the classification, and the entry is corrected under a different HTS code — one with a 25% Section 301 tariff. Suddenly, the tariff exposure is much higher than expected on a $2,250 shipment. The shipment was on hold for two weeks while it was resolved.
What went wrong: they relied on the supplier’s HTS code without independent verification. Verifying your China supplier covers business credentials — but HTS code verification is a separate step that needs the same attention.
Always verify HTS classification with a US-licensed customs broker before ordering.
Consolidate shipments. Every shipment has fixed costs — brokerage fees, bond usage, port handling. Combining orders into fewer shipments reduces the per-unit overhead on these fixed costs.
Ask for tariff clarity in your RFQ. When requesting quotes from suppliers, ask suppliers what HS code they commonly use for export, then have a US customs broker confirm the correct US HTS code. A supplier who can answer this clearly may have stronger export experience.
Build a relationship with a customs broker. The good ones do more than file paperwork. They alert you to tariff changes, flag classification risks before they become problems, and advise on duty minimization strategies. Treat them as part of your team.
Q1: How do I find the HTS code for my product?
Start at the US International Trade Commission website (usitc.gov) and use the HTS search tool. Search by keyword or browse by chapter — Chapter 39 for plastics, Chapter 85 for electronics, Chapter 63 for textile articles. Once you have a candidate code, have a licensed US customs broker confirm it before you rely on it for ordering or pricing.
Q2: Are there products from China with no Section 301 tariffs?
Yes. Not every product category is on a Section 301 list. Some categories pay only the standard duty rate, which may be relatively low. Checking this during product discovery — before you fall in love with a product — is one of the most useful things you can do as an importer.
Q3: Can I use Section 321 to avoid tariffs on small shipments?
Section 321 rules have changed significantly. Duty-free de minimis treatment for China and Hong Kong-origin goods was eliminated in 2025. More broadly, duty-free de minimis treatment has been suspended for all countries as of August 2025. Importers should not build any tariff strategy around Section 321 and should confirm the current rule with a customs broker.
Q4: What does a customs broker actually do for me?
They classify your products, file the ISF on time, prepare and submit the customs entry, calculate duties owed, and communicate with CBP on your behalf. They can also advise on tariff engineering, duty minimization, and how to handle exam situations. Fees vary by broker, shipment type, entry complexity, and service scope. For first-time importers especially, it is usually a necessary part of the process.
Q5: Should I consider sourcing from Vietnam or other countries to avoid tariffs?
For some product categories, yes. Vietnam, India, and Mexico are not subject to China-specific Section 301 tariffs, but other duties, trade remedies, origin rules, and compliance requirements may still apply. The question is whether the supply chain depth and product capability match what you need. For electronics, custom products, and complex goods, China’s ecosystem is still hard to match. For simple assembly, alternatives may work. Some importers use a China-primary strategy while testing alternative markets where the product and supply chain make sense.
Q6: My shipment is stuck at customs — what do I do?
First, contact your customs broker immediately — they are your point of contact with CBP. If the hold is documentation-related, gather the required documents fast. If it is an exam, you will be notified of costs and timeline. For carrier-related holds on express shipments, the process is different — resolving a DHL shipment hold covers the common causes and resolution steps for express freight.
Q7: What is the MPF and do I always pay it?
MPF stands for Merchandise Processing Fee. CBP charges it on most formal customs entries — for FY2026, MPF is 0.3464% of declared value, with a minimum of $33.58 and a maximum of $651.50 per entry. It applies regardless of whether Section 301 tariffs apply. There is also a Harbor Maintenance Fee (HMF) for ocean shipments. Budget for both in your landed cost calculation.
Q8: What happens if I declare a lower value to reduce my tariff bill?
CBP may question declared values that appear inconsistent with transaction records, product details, or comparable import data. Undervaluing goods is customs fraud — it exposes the importer to back-duties, significant penalties, and in serious cases, criminal liability. The supplier is not the one at risk here. You are.
Tariffs have not made China sourcing unworkable. They have made sloppy sourcing unworkable.
Importers who did their homework — right HTS code, real landed cost calculation, correct documents — kept building profitable businesses. Those who guessed got surprised at the border.
The math is not complicated once you run it properly. The paperwork is manageable with the right customs broker. And the products are still there, priced competitively, waiting for buyers who know how to land them correctly.
For US importers, tariff planning starts before the first purchase order. China sourcing for US importers helps identify suitable products, verify suppliers, and coordinate quality control before goods move toward shipment.
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