Customs & Trade Glossary

Dutiable is a legal-trade adjective meaning subject to customs duty. When a customs authority describes goods as dutiable, it means the importer must pay a tariff on them before the goods can be released. The opposite is duty-free — goods that are not dutiable, either because they are under the de minimis threshold, qualify under a free-trade agreement, or benefit from a specific suspension.

Related phrases: dutiable articles (goods legally subject to duty), dutiable value (the value used to calculate the duty — typically transaction value plus freight and insurance for EU/UK imports, or FOB value for US imports), and dutiability (the property of being subject to duty).

An HS code (Harmonized System code) is the 6-digit international classification number assigned to every product crossing a border. It is administered by the World Customs Organization and used by more than 200 customs authorities to determine duty rates, import restrictions, and trade statistics.

The structure is hierarchical: the first 2 digits identify the chapter (e.g. 85 = electrical machinery), digits 3-4 the heading (e.g. 8517 = telephones), and digits 5-6 the subheading (e.g. 8517.12 = mobile phones). National extensions go further — 8-digit CN in the EU, 10-digit HTS in the US, 10-digit commodity codes in the UK.

An HTS code is the 10-digit classification used by US Customs and Border Protection. Maintained by the US International Trade Commission, it extends the international 6-digit HS code with four additional digits for duty rates and statistical suffixes.

Example: 6109.10.00 is both the 6-digit HS code and the 8-digit HTS subheading for cotton T-shirts, with .0012 and similar statistical suffixes depending on type.

MFN duty is the baseline tariff rate shown in EU TARIC, US HTS, and UK Global Tariff. Every product has an MFN rate — it is the rate applied unless a free-trade agreement unlocks a lower preferential rate (subject to rules-of-origin compliance).

The term comes from WTO principles: members must extend the same treatment to all other members. The name is misleading — MFN is in fact the least favourable rate most traders will encounter, because preferential rates under FTAs are lower.

Country of origin is not where a product was shipped from — it is where the product was made or last substantially transformed. Origin determines whether anti-dumping duties apply, whether Section 301 China tariffs kick in, whether free-trade preferential rates can be claimed, and what labelling must appear on consumer goods.

Two legal tests are used: wholly obtained (for raw materials and products made from a single country's inputs) and substantial transformation (the product changed identity, function, or tariff heading as a result of processing). FTAs use specific product-by-product rules — see rules of origin.

Rules of origin are the per-product tests that decide whether goods qualify for a lower tariff under a free-trade agreement. There are two broad classes: preferential rules of origin (apply under FTAs) and non-preferential rules (apply to MFN treatment, anti-dumping, origin labelling).

Common tests inside FTAs: tariff shift (the product changed HS heading during manufacture), regional value content (a set percentage of the product's value was added in the FTA region), or a specified production process.

Customs value is the dollar (or euro, pound) figure that customs multiplies by the duty rate to arrive at the duty owed. Most countries follow the WTO Valuation Agreement: start with the transaction value, then adjust for freight, insurance, royalties, and assists.

Practical difference: an EU import at €1,000 FOB with €100 freight has a customs value of €1,100 (CIF). A US import at the same FOB price has a customs value of €1,000 for MFN-duty calculation (US does not add freight). VAT and local taxes are calculated on top, on the customs value plus duty.

De minimis is the value threshold below which customs duty does not apply. Countries use it to reduce the cost and delay of collecting small amounts of duty on low-value shipments.

Current levels (verify before filing): US $800, EU €150 (duty only — VAT from €0), UK £135 (duty only — VAT from £0), Canada C$20-40 depending on shipping method. Several countries have tightened de minimis for e-commerce in recent years, and US policy on China-origin de minimis has changed multiple times in 2025-2026.

Landed cost is the true unit cost of goods after they arrive at your warehouse. Formula: unit price + freight/unit + insurance/unit + duty + VAT + broker fee + local delivery.

Many sellers price products from FOB unit cost and get surprised by 20-40% margin erosion after duty and freight. Always price from landed cost.

Incoterms are the 11 standardized three-letter shipping terms (EXW, FCA, CPT, CIP, DAP, DPU, DDP, FAS, FOB, CFR, CIF) published by the International Chamber of Commerce. Incoterms 2020 is the current edition.

They answer two questions: who pays for each stage of the shipment, and at what point does risk transfer from seller to buyer. A quote of "DDP Warsaw" means the seller handles all costs including import duty until the goods reach Warsaw. "EXW London" means the buyer handles everything from collection onwards.

The General Rules of Interpretation are the six legally binding rules that classify every product into the Harmonized System. They must be applied in order: GRI 1 first, GRI 2 only if GRI 1 did not decide, and so on.

Most products are classified under GRI 1 alone — the wording of the heading makes the answer clear. GRI 3 is the most frequently cited rule for composite and mixed goods — it asks which component gives the product its essential character.

Tariff and customs duty are often used interchangeably. Technically, a tariff is the schedule of rates; a duty is the money collected. In everyday use they mean the same thing.

Types: ad valorem (percentage of customs value — most common), specific (fixed amount per unit or weight, common on agriculture and alcohol), and compound (both — e.g. textiles).

Section 301 tariffs are additional US duties imposed on Chinese-origin products under Section 301 of the Trade Act of 1974. They stack on top of the regular MFN duty.

The tariffs apply by country of origin — shipping from Vietnam does not help if the goods were actually manufactured in China. Rates have shifted repeatedly since first imposition in 2018; the USTR Section 301 lists and rates are the authoritative reference.

Anti-dumping duty is levied after a formal investigation finds that imports are being sold below normal value in the importing country. It is product-specific and country-specific — it does not apply broadly.

ADD rates and orders are maintained by the EU Commission (TRON database), US Department of Commerce, and HMRC (Trade Remedies Authority) respectively. If your product is subject to ADD, the rate can be many times larger than the base MFN duty.

CBAM is the EU's mechanism to price imported carbon emissions for specific high-emission products — cement, iron and steel, aluminium, fertilizers, electricity, and hydrogen.

Since Q4 2023, EU importers of covered goods must file quarterly CBAM reports even though no certificates are yet purchased. From 2026, importers must buy CBAM certificates equivalent to the embedded emissions, at the current EU ETS price.