APRIL 8, 2025
The Port of Los Angeles is the busiest container gateway in the U.S. – ane Hahn for WSJ
Companies are scrambling to prepare for President Trump’s new reciprocal tariffs to take effect one minute after midnight Tuesday.
But who actually pays the duties, and how do they figure out what they owe?
Tariffs on imported goods are typically paid after shipments come into the U.S. Levies aren’t collected at a tollbooth as goods cross the border. Instead, importers must calculate and pay the duties electronically or by check for each shipment that enters the U.S.
To get it right, companies typically employ licensed customs brokers, much as they hire accountants to handle their taxes.
Here’s a step-by-step look at how the tariffs are collected.
Who pays?
Companies importing goods from olive oil and T-shirts to cars and iPhones into the U.S. might owe taxes based on the value of the items, where they were made and what materials they include.
New tariffs take effect April 9 for countries such as Colombia, which exports coffee to the U.S., Vietnam, where many retailers source shirts and shoes, and China, which manufactures items from patio furniture to children’s toys.
Those duties in some cases stack on top of earlier tariffs, such as additional levies on goods from China that Trump has piled on, as well as product-based tariffs that have been in place for years.
When and how do they pay?
Before the items are shipped to the U.S. by sea, air, rail or truck, importers file paperwork electronically with U.S. Customs and Border Protection with details about the cargo.
Once the shipment arrives, customs inspectors review the paperwork before clearing the goods for release, noting the time the cargo hit U.S. soil. Agents perform spot checks and random inspections to ensure the shipment contains what it is supposed to.
When cleared for release, the cargo is often moved to a warehouse for storage. The importer then has 10 or 30 days to pay its tariff bill. The importer can pay Customs directly electronically or by check, or pay its customs broker who will in turn pay Customs.
Customs officials spot-check the payments and might later audit some transactions to ensure proper duties were paid.
How are tariffs calculated?
Tariffs are typically calculated using software that is programmed to account for varying duty rates based on where the item was made, what materials it includes and its value. The calculations require importers to know, for example, the exact value of the steel and aluminum used inside a patio-furniture set.
Jay Gerard, head of customs at freight broker Nuvocargo, said the process had become much more complicated as Trump rapidly rolled out new tariffs—and, at times, rolled them back.
“Now these customs brokers are computer experts and mathematicians figuring out these complex formulas to determine the duty rate,” Gerard said.
He said a company that previously might have had only to calculate one duty rate might now have to figure out three or more levies depending on where the goods were made, whether the items contain steel or aluminum and whether the shipment is compliant with the trade pact known as the U.S.-Mexico-Canada Agreement.
Does the shipment date matter?
Shipments might be subject to different duty rates based on the date they were loaded onto a containership.
Trump’s executive order imposing reciprocal tariffs on countries around the world specified that shipments already in transit to the U.S. as of 12:01 a.m. April 9 aren’t subject to the tariffs. That means as long as shipments leave before midnight, they are exempted from those particular duties, even if they arrive in the U.S. days or weeks later.
Where are the sticking points?
Importers that previously weren’t subject to U.S. tariffs often don’t have the infrastructure set up to make the duty payments. If a company doesn’t have a U.S. bank account, for example, it must either pay Customs via check or through its customs broker, according to Gerard.
Many companies weren’t financially prepared to absorb the additional cost of tariffs.
“No one in December knew that there would be tariffs to this degree four months later,” said Cindy Allen, chief executive of international trade and customs consulting firm Trade Force Multiplier. “A lot of companies are extremely challenged with paying high rates of duty that were unanticipated and not in their business plan.”
Allen said some companies had delayed shipments to wait and see if tariffs were revoked before bringing goods in.
Who ultimately pays?
Higher costs from tariffs are likely to trickle down to consumers in a number of ways, according to economists.
Some retailers have said they plan to pass along the costs by raising prices on goods from produce to furniture. Others have asked their suppliers abroad to absorb some of the hit.
And U.S. manufacturers aren’t immune. Many companies such as automakers source components from around the globe and are now facing rising input costs that they might pass onto consumers.
This explanatory article may be periodically updated.
