How to Calculate Landed Cost from China to USA

What is landed cost

Landed cost is the total cost to get a product from the manufacturer to the buyer warehouse in the destination country. It includes all costs from the origin point through customs clearance and last-mile delivery. Understanding landed cost helps set correct DDP prices, evaluate supplier quotes, and plan import budgets.

The landed cost formula

Landed Cost = Product Cost + International Freight + International Insurance
                + Customs Duty + Additional Tariffs + Import Tax
                + Brokerage + Handling + Last-Mile Delivery

Or (simplified for duty-inclusive DDP):
Landed Cost = Customs Value + Duty + Additional Tariffs + Import Tax + Fees

The basic landed cost formula combines product cost, international logistics, duty and taxes, and handling fees. The exact formula depends on which Incoterm governs the purchase and which costs the buyer is responsible for.

Product cost

The product cost is the base price paid to the supplier. This is typically the FOB price or the invoice value. Include any additions that form part of the customs value.

• FOB price from the supplier invoice
• Assists: materials or tooling provided by the buyer
• Royalties or license fees related to the goods
• Proceeds of later resale that flow back to the seller

International freight and insurance

Freight and insurance costs depend on the Incoterm and the shipping method. These costs may or may not be included in customs value depending on the valuation basis.

• Air freight: faster but more expensive, usually higher customs value exposure
• Sea freight: slower but cheaper, the most common method for bulk imports
• Express courier (DHL, FedEx, UPS): faster clearance, higher fees
• Insurance: marine cargo insurance to cover loss or damage in transit

Customs duty calculation

Base Duty = Customs Value x HTS Duty Rate
Additional Tariff = Customs Value x Section 301 Rate (if applicable)
Total Duty = Base Duty + Additional Tariff

Customs duty is calculated on the customs value, which is the transaction value plus applicable additions. The duty rate comes from the HTS code and any additional tariffs.

• Customs value = product cost + freight + insurance + additions (depends on basis)
• HTS duty rate = from USITC HTS database for the specific product
• Additional tariffs = from USTR Section 301 notices for China origin goods
• Verify rates before filing: USITC HTS

Import tax and fees

Beyond duty, imports may incur federal excise taxes on specific categories and state-level use taxes on the duty-inclusive value. Brokerage, handling, and port fees also add to the total.

• Federal excise taxes apply to alcohol, tobacco, and certain other products
• State use tax or sales tax applies to the duty-inclusive value in most states
• Brokerage fees vary by carrier, entry type, and shipment size
• Estimate total with the Landed Cost Calculator

FOB, CIF, and manual basis

The customs value basis determines which costs are included in the value on which duty is calculated. Choosing the correct basis matches the estimate to what customs will actually assess.

• FOB (Free on Board): product cost only, excludes freight and insurance. Buyer adds these in the landed cost formula.
• CIF (Cost, Insurance, Freight): includes freight and insurance in the customs value. Buyer adds duty and fees.
• Manual: custom combination of costs, useful when the transaction involves assists, commissions, or atypical arrangements.
• Use the Customs Value Calculator to model each basis

Tools to calculate landed cost

TariffCatalog provides free calculators to help estimate landed cost for China-to-USA shipments. All tools use manual rate inputs so each estimate can be verified.

• Landed Cost Calculator: Full landed cost breakdown with FOB, CIF, and manual basis
• Import Duty Calculator: Duty and additional tariff portion only
• Customs Value Calculator: Model customs value basis
• HS Code Finder: Find HTS code candidates for your product

Worked example: $10,000 DDP shipment

A buyer sources $8,000 of apparel from a Guangzhou supplier under FOB Incoterm. Sea freight is $1,200, marine insurance is $100, HTS 6109 base duty is 16.5%, Section 301 additional tariff is 7.5%, state use tax is 8%, and brokerage is $150. Calculation: Customs Value (CIF) = $8,000 + $1,200 + $100 = $9,300. Base Duty = $9,300 × 16.5% = $1,534.50. Section 301 = $9,300 × 7.5% = $697.50. Total Duty = $2,232. State Tax = ($9,300 + $2,232) × 8% = $922.56. Total Landed Cost = $8,000 + $1,200 + $100 + $2,232 + $922.56 + $150 = $12,604.56. Verify all rates in USITC HTS and USTR before filing.

Common mistakes to avoid

Five errors appear repeatedly in landed cost estimation. Avoiding them improves the accuracy of your planning estimate and reduces the risk of customs delays or post-entry adjustments.

• Mixing FOB and CIF in the same formula by adding freight twice or omitting it from customs value
• Forgetting Section 301 additional tariff when shipping from China, which can shift landed cost by 7.5%-25%
• Estimating state tax on customs value alone instead of the duty-inclusive value
• Ignoring brokerage, handling, and last-mile fees, which often add 5%-15% on top of duty
• Treating the calculator result as a filing outcome rather than a planning input that requires verification