10 Keys to Becoming a Successful Importer

By John J. Capela

Importing is not as easy as it may initially appear — in fact, it’s a real challenge. You have to take the time to select the right product, understand the applicable rules and regulations, identify your customers, find out about different payment and shipping alternatives, and deal with the bureaucracy known as U.S. Customs. To help you do all these things successfully, this list gives you the ten keys to becoming a successful importer.

Familiarizing yourself with import control and regulatory requirements

To avoid any problems in clearing your merchandise and getting it through Customs, you need to be familiar with U.S. Customs policies and procedures before actually importing your goods. U.S. Customs and Border Protection (CBP) does not require an importer to have a license or permit; however, other agencies — such as the Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA), and the Bureau of Alcohol, Tobacco, and Firearms (BATF) — may require a license or permit to import a specific product. Make sure you know what kind of license may be required to import your merchandise into the United States.

You also need to figure out whether the item you’re importing is subject to any special requirements in terms of product specifications, testing, certification, marketing, labeling, packaging, and documentation.

The CBP website contains valuable information for new importers. You can also get assistance by contacting the appropriate commodity specialist team at your local district office at the U.S. Customs Service or by asking your Customs broker (a person you hire to assist you in clearing your shipments through Customs).

Knowing how to classify your products for tariffs

The U.S. subscribes to the Harmonized Tariff Schedule of the United States (HTSUS) to classify goods for the purpose of assessing duties. The schedule’s assigned tariff classification code impacts the rate of duty applied. Because duties can vary from product to product, you need to make sure that you know the proper classification to minimize duties and eliminate problems at the time your goods enter the U.S.

You can get assistance in finding the right code by talking to the commodity specialist team (see the preceding section). You can also request a written, binding ruling from CBP for the proper HTSUS classification and rate of duty for your merchandise.

Checking whether you qualify for preferential duty programs

You may be eligible to benefit from preferential duty programs such as the Generalized System of Preferences, the North American Free Trade Agreement (NAFTA), the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA–DR), the Caribbean Basin Initiative, and so on. As an importer, if you don’t take advantage of these programs, you may be subject to duties that you otherwise could’ve avoided, which makes the transaction more expensive for you.

Researching quota requirements

Before you import certain commodities into the U.S., you need to research general quota information and quota requirements. An import quota is a limit on the amount of a certain commodity that can be imported into the U.S. during a specific period of time. There are two types of quotas:

  • Absolute quotas: Absolute quotas usually apply to textiles but can, in some instances, apply to other goods. They limit the amount of goods that may enter into the commerce of the U.S. during a specific period. When that limit has been reached, no additional goods are allowed into the U.S.

  • Tariff rate quotas: Tariff rate quotas permit a specified quantity of an item at a reduced rate of duty during the quota period. After that quota has been reached, the goods can still enter the country but at a higher rate of duty.

If the item you’re importing is under an absolute quota and the quota has been closed, the goods that you import won’t be allowed into the country. They’ll either have to be returned to the seller or placed, at your expense, into a Customs-controlled warehouse until a new quota has been opened.

Checking the reputation of your foreign seller

When you’re dealing with a supplier, either online or offline, there will always be a fundamental risk of fraud. The best way to minimize this risk is to conduct proper research before finalizing any transaction. Research is particularly important when you’re dealing with manufacturers and middlemen on Alibaba.com and similar sites.

You need to check the reputation, reliability, and financial status of your prospective trading partner. If your foreign seller has a questionable reputation, you’ll want to select a method of payment that will protect the import against the sellers’ nonperformance.

You can access information on the foreign seller through a U.S. Commercial Services program called the International Company Profile. Also, be sure to ask a prospective foreign seller for references and follow up with them over the phone.

Understanding Incoterms

As an importer, you have to understand the costs, responsibilities, rights, and obligations that accompany the use of a specific Incoterm (International Commercial Terms).

Every time a supplier submits a quotation for goods to you, the quotation must include a term of sale. If you don’t understand the specific Incoterm, you may overestimate or underestimate the costs associated with the goods that you’ll be importing.

Analyzing your insurance coverage

Make sure you analyze the amount of insurance on your import transaction. Weather, rough handling of cargo by carriers, long distances, and other common hazards make it important that you determine the type, amount, and extent of coverage required. You need to make sure that you identify who’ll be responsible for insurance against loss or damage while the goods are in transit.

If the foreign seller quotes using the term CIF (short for cost, insurance, and freight), the seller/exporter is responsible for obtaining the insurance. If any other shipping term is used, insurance is your responsibility; contact an international insurance carrier or your Customs broker for more information.

Don’t assume, or even take the seller’s word, that adequate insurance has been obtained. If the seller neglects to obtain adequate coverage, damage to the cargo may cause you a major financial loss, so make sure that the exporter/seller includes a certificate of insurance with all the other required shipping documents.

Knowing what’s in the purchase contract

The purchase contract should include any issue deemed significant by either the buyer or the seller. Any purchase contract must deal with issues such as product acceptance, product warranties, and dispute resolution procedures.

Entering into an import transaction without a formal written purchase contract can expose you to many significant risks that you won’t be able to exercise much control over.

Hiring a customs broker

You have the right as an importer to file a Customs entry on your own behalf. However, if you’re a first-time importer, you’ll want to consult a licensed Customs broker, a private business that handles the clearance of imported goods for you. Customs brokers are licensed by U.S. Customs and Border Protection (CBP). Importing procedures can be very complicated, and hiring a Customs broker can facilitate this process and minimize any potential future problems.

You can view a list of Customs brokers licensed to conduct business in a specific port by visiting the CBP website.

Staying on top of record-keeping

You have to comply with all record-keeping requirements of Customs. This includes keeping all documents relating to imports for a period of five years. Customs has the right to inspect the documents to determine whether you’ve complied with U.S. Customs laws.