Chinese Customs Duties on Consumer Products Imported into China

Aug 9, 2010
Daniel Workman

Tariff Rates on iPads Imported into China - cvander (Flickr)

China charges a Value-Added Tax on most imported goods, which adds up to almost 40% in extra costs for popular consumer products including sunglasses.

With a population of 1.33 billion, the People’s Republic of China is an attractive import market.

Exporters who want to penetrate this vast market must carefully research tariff duty rates and taxes that Chinese customs authorities will impose on their products.

In this analysis, China’s Most Favoured Nation (MFN) rates are presented for 10 popular imported consumer products. MFN rates are higher than those that China imposes under preferential tariff agreements like the ones in effect with Thailand or Pakistan.

Goods in this sample study are also subject to the Chinese Value-Added Tax (VAT), which is generally 13% or 17%. Note that the VAT rate applies to the imported goods’ declared value plus any tariff duties.

Where tariff duties plus taxes are too high, foreign manufacturers will have a harder time selling their more costly goods to the ultimate Chinese consumers.

China Customs Tariff Rates for Sample Consumer Products

The following products are listed in alphabetical order. Shown within brackets are the first 8 digits of the harmonized tariff schedule (HTS) code according to the Customs Import Tariff for the People’s Republic of China. Note that the HTS code shown does not necessarily fully match codes in effect in Canada or the United States. For statistical purposes, each country assigns its own seventh and eighth digits.

Bottled water (HTS code 2201.90.10) … 10% of imports’ declared value plus VAT of 17%
Cell phones (8517.19.90) … no tariff duty but 17% VAT applies
Computer parts and accessories (8473.30.10) … no tariff duty but 17% VAT applies
Flu medicine (3002.20.00) …3% tariff duty plus 17% VAT
Hard cheese (0406.90.00) …12% plus 17% VAT
iPad (8471.30.00) … no tariff duty but 17% VAT applies
Perfume … (3303.00.00) … 14.2% plus 17% VAT
Running shoes (6404.11.00) … 24% plus 17% VAT
Shaving cream (3307.10.00) … 12.5% plus 17% VAT
Sunglasses (9004.10.00) … 20% plus 17% VAT.

At 35%, athletic footwear imported into China is subject to the highest tariff duty rate. Additional excise duties and taxes are applied after the tariff duties are added to the import shipment’s price.

Other consumer products subject to costly Chinese duty rates include hard cheese (28%), bottled water (20%) and sunglasses (20%). Flu medicine including vaccines has the lowest tariff rate at 2%.

Canada’s Customs Rates Compared with China’s Tariffs

Given China’s 17% Value-Added Tax, it should come as no surprise that Canada’s Canada’s Most Favoured Nation (MFN) tariff treatment is much lower for all 10 consumer products.

Bottled water … 6.5% of imports’ declared value (417% lower than China’s rate including VAT)
Cell phones … duty free
Computer parts and accessories … duty free
Flu medicine … duty free
Hard cheese … 2.84 cents per kilogram
iPad … duty free
Perfume … 6.5% (482% lower than China’s rate)
Running shoes … 16% (260% lower)
Shaving cream … 6.5% (456% lower)
Sunglasses … 5% (743% lower).

The highest Canadian tariff rate is 16% on running shoes. That customs duty rate is less than a third of the 41% tariff rate plus VAT payable for imported athletic shoes in the People’s Republic.

US Customs Rates Compared with China’s Duties

The United States does not impose an across-the-board VAT, so U.S. general tariff rates are generally much lower than what would be charged had the 10 products below been imported into China. In fact, 6 of these consumer goods are generally duty free items at the American border.

Bottled water … duty free
Cell phones … duty free
Computer parts and accessories … duty free
Flu medicine … duty free
Hard cheese … 12% of imports’ declared value (244% lower than China’s rate)
iPad … duty free
Perfume … duty free
Running shoes … 10.5% (395% lower)
Shaving cream … 4.9% (604% lower)
Sunglasses … 2% (1,853% lower).

At 2%, the general tariff duty rate for importing sunglasses into the United States is much lower than the almost 40% in duties (including VAT) required to import those same sunglasses into China.

China International Trade Leads

The Value-Added Tax generates significant cash flow for the Chinese government. At the same time, exporters into China are at somewhat of a disadvantage because prices for their final products are magnified by both Chinese customs duties plus the VAT.

In this comparison of 10 consumer products, China’s customs duties plus the VAT added an average 27% to the declared valued of imported goods.

This compares with an average 5% in tariff duties for those same products when imported into Canada, and 3% in customs duties when imported into the United States.

Entrepreneurs who want to ship their products to China should carefully factor in the higher duties and taxes when calculating the final price points for the ultimate Chinese consumers.