US customs value: why freight is treated separately

A sofa reaches the receiving dock wrapped as carefully as a museum loan. The unwrapping produces enough foam for a second, less comfortable sofa.

The buying worksheet needs to separate the merchandise from the trip. US transaction value starts with the price actually paid or payable for the merchandise, with specified additions and exclusions. Qualifying international transportation and insurance are treated separately. “Duty is always charged on the factory price” is too broad: the actual transaction and required additions still need review. 19 U.S.C. § 1401a.

General information, not legal or customs advice.

Separate the customs base from the full acquisition cost

Section 1401a(b)(4)(A) excludes transportation, insurance, and related services incident to international shipment from the country of exportation to the US place of importation from the defined price paid or payable. Section (b)(1) identifies additions, including packing, selling commissions, assists, certain royalties, and proceeds accruing to the seller.

That is why the broker needs the transaction documents, not just the factory's headline price. Transaction value also has conditions for use, and the statute provides other valuation methods when it cannot be used. Give the broker the whole agreement before choosing the duty base.

Landed cost serves a different job: it brings the acquisition charges together for the store's cost records. Freight can be part of landed cost without becoming part of the value used for the duty calculation. The landed-cost guide explains that broader record.

Use actual support for a bundled delivered price

A delivered or CIF quotation may include transport and insurance in one total. Ask for the breakdown and the evidence needed to support the treatment. A separate label on an invoice helps identify the charge, but it does not turn an estimated deduction into a supported actual amount.

The Customs Service's freight-deduction guidance explains that deductions are based on actual costs, not estimates, and must concern amounts included in the price. Foreign inland freight has additional requirements. Keep the carrier or forwarder evidence with the vendor invoice.

If the vendor only offers a delivered price, ask the broker what evidence can establish the correct value. Do not invent a freight allowance to subtract. Check with your attorney if the transaction structure or missing evidence creates a valuation dispute that needs legal review.

See the effect on a container estimate

Say the merchandise value is $60,000, supported international freight is $7,500, and insurance is $250. Assume for this illustrative calculation that transaction value is accepted, there are no additional dutiable amounts, and the relevant ad valorem duty rate is 25%.

The difference is $1,937.50. Spread across 30 sofas, that is about $64.58 per sofa. This is an estimate illustrating the base, not a duty ruling or freight quotation. The rate itself must come from the product's classification, origin, and governing measure; see the Section 232 guide for that separate question.

Identify the domestic leg separately too

Post-importation transportation is excluded from transaction value when identified separately under section 1401a(b)(3). Keep the port-to-warehouse cost distinct and provide the evidence the broker requests. Do not bundle every transport service under “freight” and assume each segment has identical requirements.

The same discipline improves the store's own cost review. The ocean-freight guide separates the ocean and inland legs, while the freight-and-duty cost guide shows their different effects on the purchase.

For goods imported into another country, obtain that destination's valuation advice. Do not export this US worksheet as a universal rule. The destination, transaction, and tax or duty being calculated need their own analysis.

Enter the supported duty in OrderPilot

OrderPilot records purchasing charges; it does not determine customs value or calculate the legal duty for the entry. Enter the actual duty from the entry summary as a PO charge and apply it to the lines that incurred it. Attach the broker's breakdown so the amount remains explainable. Before entry, use a clearly identified estimate based on the broker-supported value and rate. Reconcile it with the actual charge when the documents arrive, keeping the explanation for any adjustment beside the supporting entry documents.

Take these questions to the broker: What valuation method and additions apply? What actual documents support the freight and insurance treatment? How should the domestic leg and final entry amounts be recorded? The brokerage guide helps organize the answers into the import file.

Sources

1. 19 U.S.C. § 1401a: Customs value — United States Code, Cornell Legal Information Institute.
2. Proper deductions of freight and other costs from customs value — U.S. Customs Service, March 2000, archived by GovInfo.