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Calculate specific import duties and identify your true Total Landed Cost. Instantly toggle between USA (FOB) and EU (CIF) international tax valuation physics.
*Tariff is calculated only on the value of the goods. Excludes freight.
Calculating a tariff seems simple: you find your product's percentage tax rate and you multiply it by the cost of the goods. But the definition of 'cost' changes dramatically depending on where the cargo ship drops its anchor.
FOB stands for Free On Board. Countries that use FOB valuation (like the United States) are "importer-friendly." They only charge tariffs on the actual value of the product itself.
CIF stands for Cost, Insurance, and Freight. Countries that use CIF valuation (like the EU and UK) are notoriously strict. They charge tariffs on the goods, PLUS the cost of shipping, PLUS the cost of cargo insurance.
Many businesses fail because they only look at the manufacturer's invoice when setting their retail prices. Your Total Landed Cost is the true capital it requires to get your product across an ocean, past armed customs agents, and physically dropped into your warehouse racking. You must set your retail profit margins based entirely on your Landed Cost, never the factory quote.
A tariff is an import tax charged by the destination country when goods cross customs. For importers, tariffs directly affect unit economics, pricing strategy, and gross margin. Even a small change in duty rate can materially shift profitability at scale.
Tariff analysis is critical for sourcing decisions, market-entry planning, and quote approvals. Businesses that model landed cost upfront reduce margin surprises, avoid underpricing, and negotiate better contract terms with suppliers and freight partners.
Tariff Amount = Customs Value x Duty Rate
Landed Cost = Goods Cost + Freight + Insurance + Tariff Amount
Effective Tariff % = Tariff Amount / Goods Cost x 100
Customs Value: taxable base used by customs (FOB or CIF method).
Duty Rate: tariff percentage from HS/HTS classification.
Freight/Insurance: logistics costs that may be taxed under CIF.
Landed Cost: final all-in cost before local warehousing and distribution.
Use conservative assumptions for freight volatility and currency conversion when planning multi-quarter imports.
Goods value is $20,000 and duty rate is 8%. Under FOB, taxable base is $20,000. Tariff = $1,600. Freight does not increase duty base, improving landed-cost efficiency versus CIF imports.
Goods $20,000, freight+insurance $3,000, duty 8%. Taxable base becomes $23,000. Tariff = $1,840, which is $240 higher than FOB treatment on the same goods value.
Base duty 5% plus additional 25% trade measure yields total 30% duty exposure. A product with $50 landed target can quickly become margin-negative without repricing.
Compare valuation methods and duty structures to understand true landed-cost differences.
| Scenario | Taxable Base | Duty Rate | Tariff Amount | Business Impact |
|---|---|---|---|---|
| FOB, standard duty | Goods only | 5%-10% | Lower baseline duty | More pricing flexibility |
| CIF, standard duty | Goods + freight + insurance | 5%-10% | Higher than FOB | Margin compression risk |
| FOB + additional tariff layer | Goods only | 20%-35% | Large duty burden | Requires repricing or sourcing shift |
| CIF + additional tariff layer | Goods + logistics costs | 20%-35% | Maximum duty exposure | Highest landed cost pressure |
Bookmark this supply-chain tool to rapidly identify the true Landed Cost of new manufacturing contracts.
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