Customs effects on pricing

One thing that clients don’t always take into account, is the effect of duties on the final retail price of their planned products. This occurs with clients who are new to importing and retailing goods, as experience quickly teaches one that duties can have a huge effect. When I start a new project with a client who I think may not be aware of this, I am always quick to point out footwear, which has some classifications that have duties as high as 37.5%! This is definitely something that will have to be taken into account when planning your suggested retail price, landed costs, etc.

The Outdoor Industry Association, among others, has been working to change the US duties on some classifications of outdoor apparel and footwear. The footwear, in particular is very outdated and is based on US manufacturing that unfortunately doesn’t exist anymore. (There are only a few types of footwear, that you can find a factory able to make in the US.) The end result of it is not helping local economy but hindering it. It looks like some of this is about to change as some water-resistant athletic footwear in the 37.5% classification may get bumped to an “athletic footwear” classification that is only taxed at 20%. You can read more about this and follow the progress of these amendments on the OIA site.

Customs classifications are complex and hard to decipher. I help clients navigate this maze, and in some complex cases help them get binding rulings so that they are guaranteed their product will be at a certain duty rate.

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