Who Pays Customs Duty on Canton Fair Orders?

By Yaurapulse

Published 2026-10-24 Updated 2026-10-24Pricing, MOQ & Negotiation

You just placed an order at the Canton Fair. The supplier quoted you a price of $10,000. You paid your 30% deposit. Production is underway. But there is a question you need to answer before the goods ship: who pays the customs duty when these goods arrive in your country?

This is a question that trips up many new importers. They focus on the product price they negotiated at the fair and forget that customs duties can add 5% to 30% to their total cost. Even worse, they are not sure whether they or the supplier is responsible for paying those duties.

The answer depends on the trade terms you agreed to. Under some terms, you pay the duty directly. Under others, the supplier handles it — but the cost is still passed on to you.

This guide will explain exactly who pays customs duty on Canton Fair orders, how the responsibility changes with different trade terms, how to calculate your duty, and how to make sure you are not surprised by unexpected charges.

Who is legally responsible for paying customs duty?

The short answer: the importer of record is legally responsible for paying customs duty.

The importer of record is the person or company named on the customs entry as the responsible party. This is the party that customs authorities hold accountable for:

Paying all import duties and taxes
Ensuring the goods comply with import regulations
Providing accurate documentation

Here is the key point: The importer of record is determined by who is listed on the customs entry, not by who you negotiated with at the Canton Fair. If your name is on the entry, you owe the duty. If the supplier's name is on the entry, they owe it.

Under most trade terms used at the Canton Fair (FOB, EXW, CIF), you are the importer of record. This means you are legally responsible for paying the customs duty in your country.

Does the trade term determine who pays the duty?

Yes. The Incoterm (trade term) you agree to determines who handles customs clearance and who pays the duty.

FOB (Free on Board): The supplier delivers goods to the Chinese port. You are responsible for everything after that, including ocean freight, insurance, and import customs clearance in your country. You pay the duty.

EXW (Ex Works): The supplier makes goods available at their factory. You handle everything from there, including export clearance in China and import clearance in your country. You pay the duty.

CIF (Cost, Insurance, Freight): The supplier pays for freight and insurance to your destination port. But once the goods arrive, you handle customs clearance and pay duties. You pay the duty.

DDP (Delivered Duty Paid): The supplier handles everything, including import customs clearance and duty payment in your country. The supplier pays the duty directly — but they have already included the duty cost in your DDP price. So effectively, you still pay for it, just indirectly.

DAP (Delivered at Place): The supplier delivers goods to your named location but does NOT handle import clearance or pay duty. You pay the duty.

The rule of thumb: Under all Incoterms except DDP, you (the buyer) are the importer of record and you pay the customs duty. Under DDP, the supplier is technically the importer of record, but they build the duty cost into your price.

How does DDP duty payment actually work?

DDP sounds great — the supplier handles everything, including duty. But you need to understand how it works to avoid surprises.

Under DDP, the supplier or their freight forwarder acts as the importer of record. They file the customs entry, pay the duty, and deliver the goods to your door. The duty cost is included in the DDP price they quoted you.

But here is what you need to check before accepting DDP:

Who is the actual importer of record? Is it the supplier, their forwarder, or you? If the supplier's forwarder uses their own name as importer of record, this can create issues. If the goods are seized or there is a customs dispute, the forwarder is legally responsible, not you. But the forwarder may pass those costs back to you.

What HTS code and declared value will they use? The duty rate depends on the HTS (Harmonized Tariff Schedule) code and the declared customs value. If the supplier uses the wrong HTS code or declares an incorrect value, you could face penalties later — even though they handled the clearance.

Does the DDP price include all duties and fees? Make sure the price includes base duty, any additional tariffs (like Section 301), MPF, HMF, and customs clearance fees. Some DDP quotes exclude certain fees that you will be billed for later.

My advice: DDP is convenient for beginners, but always ask these three questions before accepting it:

Who is the importer of record?
What HTS code and declared value will be used?
Does the price include all duties, taxes, and fees?

How is the customs duty amount calculated?

Customs duty is usually calculated as a percentage of the customs value of your goods.

What is customs value? In most countries, the customs value is based on the transaction value — the price you actually paid for the goods, which is typically the FOB price. This includes the product cost plus the cost of getting the goods to the port of export (domestic trucking and export clearance in China).

The duty formula:

Customs Duty = Customs Value (FOB Price) times Duty Rate

Example: If your FOB price is $10,000 and your duty rate is 10%, your base duty is $1,000.

The duty rate depends on your product's HTS code. Every product has a 10-digit HTS code that determines its duty rate. For example:

Clothing might have a 10% to 20% duty rate
Some electronics might have a 0% duty rate
Furniture might have a 0% to 5% duty rate

The supplier's HTS code is a starting point, not a final decision. Your country's customs authority makes the final determination of the correct HTS code and duty rate. If you disagree with the supplier's classification, consult a customs broker.

What additional fees are charged on top of the base duty?

In the US, customs charges are made up of several parts. The base duty is usually the largest, but there are additional fees:

Base duty rate. This is the percentage of your customs value determined by your HTS code. Most consumer goods are charged this way. For example, if a product is declared at $100 and the duty rate is 10%, you pay $10 in duty.

Additional duties (Section 301 tariffs). For Chinese-origin goods imported into the US, there may be additional Section 301 duties on top of the base rate. These are divided into four lists, with additional duty rates ranging from 7.5% to 25%. For example, LED lights might have a 5% base duty plus a 10% Section 301 duty, for a total of 15%.

MPF (Merchandise Processing Fee). Charged by US Customs at approximately 0.3464% of the cargo value, with a maximum of about $650.

HMF (Harbor Maintenance Fee). Charged at 0.125% of the cargo value for ocean freight shipments only.

Example calculation for a $10,000 shipment with 5% base duty and 10% Section 301:

Base duty: $10,000 times 5% = $500
Section 301 duty: $10,000 times 10% = $1,000
MPF: $10,000 times 0.3464% = $34.64
HMF: $10,000 times 0.125% = $12.50
Total: $1,547.14

WARNING: Always check whether your product is subject to Section 301 or other additional tariffs. These can double or triple your duty cost and are easy to miss if you only look at the base duty rate.

Is there a duty-free exemption for small shipments?

Yes. In the US, shipments valued under $800 are exempt from customs duty under the de minimis rule.

This means if you are importing samples or a very small order worth less than $800, you will not pay any customs duty. This exemption is designed to simplify the import process for low-value shipments.

Important details about the $800 exemption:

It applies per shipment, not per product
The value must be the actual transaction value, not a declared value you made up
Goods subject to certain regulations (like FDA-regulated products) may not qualify
Multiple shipments from the same supplier on the same day may be combined for duty calculation

For orders over $800, you will owe customs duty. Make sure to factor this into your cost calculation when placing Canton Fair orders.

How do you check your product's duty rate?

Before you place an order at the Canton Fair, you should check the duty rate for your product. Here is how:

1. Get the HTS code from the supplier. Ask the supplier for the HS code they use for export. This is a 6- to 10-digit code that classifies the product internationally.

2. Verify the HTS code in your country. Use your country's official tariff database to look up the duty rate. In the US, use the USITC Harmonized Tariff Schedule website. Enter the supplier's HS code and check the general rate of duty.

3. Check for additional tariffs. For Chinese-origin goods imported to the US, use the USTR Section 301 product search to check whether your product's 8- or 10-digit HTS subheading is covered by additional tariffs.

4. Consult a customs broker. If you are unsure about the correct HTS code or duty rate, ask a customs broker. They can confirm the classification and calculate your estimated duties.

Key point: The supplier's HS code is a starting point, not a final US customs decision. Material, function, construction, and use can all change the code. Always verify the classification independently.

What happens if you do not pay the duty?

If customs duty is not paid, your goods will not be released from customs. They will be held at the port or airport until the duty and any associated fees are paid.

Consequences of non-payment or underpayment:

Goods held in customs storage, accumulating storage fees (demurrage)
Fines for under-declaring the value of goods
Seizure of goods for serious violations
Damage to your import clearance credit with customs authorities
Legal action by customs authorities

WARNING: Never undervalue your goods on the commercial invoice to reduce duty. Customs authorities actively audit low-value declarations. If caught, you will pay back duties plus fines, and your future imports may be flagged for inspection.

Who pays the duty if the supplier ships DDP?

Under DDP terms, the supplier (or their freight forwarder) is the importer of record and pays the duty directly. But this does not mean the duty is free — it is built into the DDP price.

Here is how it works in practice:

The supplier calculates your total DDP price, which includes product cost, freight, insurance, customs clearance, and an estimated duty amount.
The supplier's forwarder acts as the importer of record in your country.
The forwarder pays the actual duty to customs.
If the actual duty is higher than the supplier's estimate, the supplier absorbs the difference (or tries to pass it to you).
If the actual duty is lower, the supplier keeps the difference as profit.

The risk for you: If the supplier underestimates the duty, they may cut corners — using the wrong HTS code, declaring a lower value, or skipping required documentation. This puts you at risk of customs penalties later.

Bottom Line

The question of who pays customs duty on Canton Fair orders comes down to one thing: who is the importer of record on the customs entry.

Here is what you need to remember:

Under FOB, EXW, and CIF terms, you pay the duty. You are the importer of record.
Under DDP terms, the supplier pays the duty directly, but the cost is included in your DDP price.
Customs duty = Customs Value (FOB Price) times Duty Rate. The duty rate depends on your HTS code.
Check for additional tariffs like Section 301, which can add 7.5% to 25% for Chinese-origin goods.
Shipments under $800 are duty-free in the US.
Always verify the HTS code independently — the supplier's code is a starting point, not a final decision.
Never undervalue your goods — the risk of fines and shipment seizure is not worth the small duty savings.

The product price you negotiate at the Canton Fair is never your final cost. Always calculate the full landed cost — product price plus shipping plus duties plus fees — before placing your order. The supplier who gives you the lowest FOB price is not always the cheapest option once duties and fees are added.