Expanding your business into the U.S. market is one of the best growth moves an international seller can make but it’s also one of the most complex. Duties, tariffs, HTS codes, and Incoterms can quickly turn opportunity into frustration if you don’t understand how they work together.

Our team has seen it all. From smooth, compliant imports that scale profitability to panicked calls from business owners whose shipments are stuck in customs. The difference almost always comes down to one thing: knowledge. Understanding global trade and partnering with an expert 3PL provider is the fastest way to build a reliable U.S. operation.

Learn How Duties, Tariffs, and HTS Codes Affect Your Bottom Line

Here are four of the most common questions we hear from international sellers, along with insights from our logistics team.

What does the country of origin determine?

Your product’s country of origin determines duty rates, tariff eligibility, trade preferences, documentation requirements, and even how customs view your shipment.

Selecting the country of origin isn’t based simply on where it was made. It’s defined by where the product underwent its last substantial transformation. Understanding this can help you plan strategically and avoid costly surprises.

What are duties and how are they calculated?

Duties are taxes levied on imported goods, calculated not on your retail price but on the customs value of your goods.

How are the customs value of goods determined?

The customs value is typically the invoice price paid to your factory, adjusted using the Harmonized Tariff Schedule (HTS). Every imported product has its own HTS classification, which determines duty rates and tariff exposure.

Will I be charged tariffs on top of duties?

Yes. Tariffs are additional duties imposed for political and economic reasons, added on top of your HTS-based duty rate.

We’ve seen brands that, sadly, operated with an incorrect HTS code for years costing them thousands of dollars. An apparel brand, with $18M annual revenue, used an incorrect classification their broker initially suggested. After three years, they had overpaid duties  of around $140,000 and missed out on another $85,000 in trade preferences. It’s an expensive reminder that even a small oversight in classification can make a big impact.

Understand Incoterms: Who Pays and Who Risks What

Understanding duties and classifications is only part of the equation. Equally important is knowing who’s responsible for costs, risk, and logistics along the way, which is where Incoterms come in.

Incoterms (International Commercial Terms) are three-letter codes that determine the responsibilities of buyers and sellers.

Intoterms define risk. The more you understand them, the more control you have over your supply chain, costs, and compliance.

Letting your factory determine your Incoterms is rarely in your best interest. It is more likely they will choose what is best for them, not you.

Here’s how we’ve seen this play out. A factory offers DDP terms at a price that seems competitive. Behind the scenes they are often cutting corners on customs compliance or misclassifying your goods to reduce duties. However, misclassifying products, understating values, or using questionable documentation practices results in penalties and increased scrutiny on future shipments. Avoiding this begins with familiarity of the terms.

Key Incoterms every importer should know:

EXW (Ex Works) – You take full responsibility from factory to final delivery. It gives you control but also all the risk.

FOB (Free on Board) – The seller handles costs and risks until goods are loaded onto the ship. After that, it’s on you.

CIF (Cost, Insurance, and Freight) – The seller covers shipping and insurance to the U.S. port, but you take over once it lands.

DDP (Delivered Duty Paid) – The seller covers nearly everything; shipping, duties, and customs.

Partner with Experts Who Understand Global Trade

Success in global trade requires knowledge and execution. Understanding of duties, HTS codes, customs compliance, and Incoterms gives you a competitive edge while your competitors are untangling shipping delays. We help international sellers equip themselves with this knowledge in The U.S. Logistics Playbook, written by our president and founder Steve Thomson.

The smartest importers surround themselves with the right partners, experts who understand the system and can help you thrive within it. If you’re ready to expand your business into the U.S. market with confidence, Sweetwater Logistics can help you build a trade strategy that is compliant, cost-efficient, and built for growth.