# Import duties, tariffs and customs compliance
A nylon shell jacket and a cotton hoodie can cross the same US border on the same truck, yet one arrives with a duty rate near 27% and the other under 17%. The difference is not the price on the invoice. It is a ten-digit code that a customs broker typed months earlier. Get that code wrong and you can double your landed cost, trigger back-duties, or have a container held at port while your holiday drop misses the shelves.
This lesson walks through how those codes work, how free-trade agreements can zero them out, and the paperwork that keeps freight moving.
Every product crossing a border is classified under the Harmonized System (HS), a global numbering scheme run by the World Customs Organization (WCO). The first six digits are identical worldwide. Countries then add their own digits.
For apparel, the code hinges on three things: the garment type, the gender/age split, and above all the fiber content. A jacket that is chief-weight cotton lands in a different heading than the same jacket in synthetic fibers, and the duty gap is large.
Textile and apparel duties are among the highest of any consumer category. In the US, many garment lines carry rates in the 15% to 32% range (estimate, based on current HTSUS chapters 61 and 62; verify the exact line before you rely on it). Compare that to most electronics, which often enter duty-free.
That means a classification error in fashion is expensive in a way it rarely is in other sectors. A one-percentage-point mistake on a large program is real money.
Worked example (illustrative).
You import 50,000 nylon jackets. Customs value (the price actually paid, roughly) is $40 each, so a $2,000,000 shipment.
If your broker had misclassified it as a cotton garment at, say, 15.9%:
That $236,000 gap does not disappear. If US Customs and Border Protection (CBP) finds the error on audit, you owe the difference plus interest, and potentially penalties. Underpayment is not a saving. It is a liability sitting on your books.
Landed cost is the total to get goods to your door: product cost + freight + insurance + duty + fees + customs broker charges. Duty is often the single largest add-on for apparel.
In the US, on top of duty you pay:
In the EU, you pay the Common Customs Tariff duty plus import VAT at the destination country's rate (often 19% to 25%), though VAT is generally recoverable by a registered business while duty is a hard cost.
The lesson: model landed cost per style *before* you commit to a sourcing country. A cheaper factory in a high-tariff country can be more expensive delivered than a pricier factory that qualifies for a trade preference.
A free-trade agreement (FTA) can reduce a duty to zero, but only if the goods "originate" in a partner country under that agreement's rules of origin (ROO). Origin is not where you shipped from. It is where the product was substantially made.
Key agreements for fashion:
Say you sew jeans in Mexico for the US market.
To claim preference you need a valid certification of origin and records proving it. If CBP asks and you cannot document the yarn source, the claim collapses and duties come due.
Customs entry runs on paperwork. The core set for an apparel import:
Two frequent friction points in fashion specifically:
1. Fiber content mismatch. The invoice says 100% cotton, the care label says 60/40 cotton-poly, the code assumes something else. CBP notices. This changes the classification and the duty.
2. Undervaluation. Splitting the "real" price into a low invoice plus a side payment is customs fraud. Value must reflect the price actually paid or payable.
You hire a licensed customs broker to file the entry, but the importer of record (IOR) carries the legal liability for correct classification, valuation, and duty. You cannot outsource the liability. Under reasonable care rules, CBP expects the importer to have a documented process, not just to trust the broker.
Because origin now carries ethical as well as tariff weight, US enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) ties directly to cotton sourcing. Goods with inputs from the Xinjiang region face a presumption of forced labor and can be detained regardless of tariff status. Origin documentation and duty documentation increasingly overlap.
Knowledge check
1. Two similar garments cross the same border on the same truck but receive very different duty rates. According to the lesson, what most likely drives this difference?
2. Why does a classification error carry more financial risk in fashion than in a sector like consumer electronics?
3. A company confidently applies an HTSUS code because 'the first six digits matched what our EU supplier used.' What is the flaw in this reasoning?
4. Select ALL correct answers about how tariff classification systems are structured.
Select all the correct answers.
5. Select ALL correct answers describing the practical consequences of getting an apparel tariff code wrong.
Select all the correct answers.
You do not have to guess. Two tools give you certainty:
A quick, defensible workflow for a new style:
1. Confirm exact fiber content and construction (knit vs woven, gender, garment type).
2. Find the candidate HTSUS/CN heading; read the chapter notes, not just the description.
3. Check for an applicable FTA and whether the origin rule is met.
4. Model landed cost including MPF/HMF or VAT.
5. If duty stakes are high or the code is ambiguous, request a binding ruling.
6. Keep records for the required retention period (five years in the US).
Tariff rates are political. Additional duties (Section 301 measures on certain Chinese goods, safeguard actions, and new country-specific tariffs) have shifted repeatedly in recent years and continue to move in 2026. Treat any specific rate in this lesson as illustrative and always pull the live figure from the official schedule before quoting a landed cost.