Part IV · Tax Regimes · No. 11

Customs and import duties

Customs duty applies to most goods at U.S. importation. For luxury, the classification line between dutiable consumer goods and duty-free fine art and antiques drives the import cost — and the post-importation state use tax depends on the customs value declared.

The rule

The United States imposes customs duty on imported merchandise under the Tariff Act of 1930, as amended, and successor instruments. Duty rates are set by the Harmonized Tariff Schedule of the United States (HTSUS), maintained by the U.S. International Trade Commission. Customs and Border Protection (CBP) administers duty collection.

The duty rate depends on three things: the classification of the article under the HTSUS, the country of origin, and the customs value of the shipment. Free-trade-agreement preferences and special programs may reduce the applicable rate.

The statutory basis

• 19 U.S.C. §1202 — adoption of the HTSUS.
• 19 U.S.C. §1401a — customs valuation under the WTO Valuation Agreement.
• 19 U.S.C. §1481 — invoice requirements.
• 19 U.S.C. §1484 — entry of merchandise.
• 19 C.F.R. Parts 152, 159 — valuation and liquidation regulations.
• 19 U.S.C. §§1304, 1481 — country-of-origin marking and invoice declarations.

Scope — duty rates on luxury imports

The most distinctive feature for luxury is the chapter 97 duty-free treatment of original fine art and antiques. Most original paintings, sculpture, prints, and antiques over 100 years old enter the U.S. at zero duty. The treatment has also survived the 2025–2026 tariff measures: works of art were outside the IEEPA tariffs as "informational materials" (50 U.S.C. §1702(b)(3)), and chapter 97 goods (headings 9701–9706) are listed as exempt from the Section 301 tariffs that took effect on 24 July 2026.

The 25% light-truck duty

A historic anomaly worth noting: imported light trucks are subject to a 25% U.S. customs duty under HTS 8704, the so-called "chicken tax" enacted in 1964 in retaliation for European tariffs on U.S. chicken exports. The duty does not apply to passenger cars (HTS 8703) but does apply to light trucks and certain SUV configurations. Foreign manufacturers respond by assembling light trucks in U.S. facilities or by reconfiguring imports to qualify as passenger vehicles.

The luxury-vehicle effect is mostly indirect — most luxury SUVs are classified as passenger vehicles at 2.5% — but the rule shapes the U.S. assembly base for high-end pickup and SUV variants.

Customs valuation

The customs value is the transaction value — the price actually paid or payable for the merchandise — adjusted for certain additions (commissions, packing, certain royalty payments, certain assists) under 19 U.S.C. §1401a. Where transaction value is unavailable or unreliable, fallback methods apply (transaction value of identical goods, deductive value, computed value, fall-back).

For art the customs value is the bona fide transaction price. Under-declaration of customs value on art has been a recurring civil and criminal enforcement area, particularly where the under-declaration is used to reduce state use-tax exposure on the post-importation use of the work. Undervaluation can bring penalties under 19 U.S.C. §1592 and, where intentional, criminal charges.

Country of origin and free-trade preferences

The U.S. operates several preferential trade programs:

• USMCA (United States-Mexico-Canada Agreement) — successor to NAFTA, providing duty-free treatment for qualifying goods.
• Numerous bilateral FTAs with Australia, Bahrain, Chile, Colombia, Israel, Jordan, Korea, Morocco, Oman, Panama, Peru, Singapore, and others.
• Generalized System of Preferences (GSP) — duty-free treatment for designated developing countries on listed products. The program lapsed on 31 December 2020 and, as of October 2026, has not been renewed.
• Civil Aircraft Agreement — duty-free treatment for civil aircraft and parts.

For luxury goods originating in the EU or Switzerland, no U.S. FTA preference applies. Until 2025 most such trade moved at published MFN rates; since then, the additional tariffs described below have been layered on top, typically under negotiated "all-in" ceilings.

Additional tariffs, 2025–2026 (as of October 2026)

The tariff layer on top of MFN rates has changed repeatedly and should be checked at the date of entry. Section 232 of the Trade Expansion Act of 1962 (national security) and Section 301 of the Trade Act of 1974 (unfair trade practices) are the current principal authorities.

• IEEPA tariffs (April 2025 – February 2026). "Reciprocal" tariffs imposed under the International Emergency Economic Powers Act reached 39% on Swiss goods from August 2025, reduced to a 15% all-in ceiling under the November 2025 U.S.–Switzerland framework; EU goods carried a 15% all-in ceiling. On 20 February 2026 the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize tariffs.
• Section 122 surcharge (24 February – 24 July 2026). A temporary 10% global surcharge under Section 122 of the Trade Act of 1974, which lapsed at its 150-day statutory limit.
• Section 301 forced-labor tariffs (from 24 July 2026). USTR imposed tariffs on goods of 60 economies for failing to prohibit imports made with forced labor: 10% or 12.5% generally, and for the EU and Taiwan an all-in ceiling of 10% (MFN plus 301), for Japan, Korea, and Switzerland 12.5%. A Swiss watch therefore bears a combined 12.5% (MFN plus Section 301); a UK-origin good bears 10% on top of MFN. Chapter 97 art and antiques, informational materials, and goods subject to Section 232 are exempt. Unlike Section 122, the action has no expiry date, and court challenges are expected.
• Section 232 on vehicles. Since April 2025 imported passenger vehicles bear a 25% Section 232 duty, reduced under negotiated arrangements for the EU, Japan, and Korea (15% all-in) and for UK vehicles within an annual quota. Steel and aluminum (and their derivative products) also bear Section 232 duties.
• China. The Section 301 tariffs on Chinese-origin goods imposed from 2018 (covering, among other things, certain watches and jewelry) continue alongside the 2026 measures.

For luxury buyers the practical effect is a landed-cost increase on watches, jewelry, leather goods, wine, and vehicles from Europe and Switzerland, while fine art and antiques remain duty-free. Swiss watch houses raised U.S. retail prices several times during 2025–2026 as the rates changed.

Elections and exceptions

• Temporary admission. Goods imported for a defined period (exhibition, repair, contest) may enter under a TIB (Temporary Importation under Bond) without payment of duty, subject to re-export.
• ATA Carnet. An international customs document permitting temporary admission across many jurisdictions. Used routinely for art on loan to U.S. exhibitions.
• Bonded warehouse. Goods may be stored in a customs-bonded warehouse for up to five years without entry; duty is paid only upon withdrawal.
• Foreign Trade Zone. A geographically defined zone within the U.S. treated as outside customs territory for duty purposes. Used principally for manufacturing; secondary use in luxury storage.
• Drawback. Refund of duty when imported goods are subsequently exported, allowing duty-free re-exportation of luxury items that did not clear the U.S. market.
• De minimis. The $800 per-person, per-day de minimis exemption for shipments (19 U.S.C. §1321) has been suspended for all countries since 29 August 2025, and CBP interim final rules of 24 June 2026 continue the suspension indefinitely for both postal and non-postal shipments. Returning travelers' personal exemptions for accompanied goods are a separate rule.

Interaction with other regimes

• State use tax. Use tax in the state of destination applies on the customs value plus duty. A New York buyer of a $1 million painting pays no federal customs duty (HTS 9701) but pays New York use tax on the $1 million customs value.
• Federal excise. Wine and spirits attract federal alcohol excise in addition to customs duty.
• Cultural-property law. Import of certain antiquities is restricted under the Cultural Property Implementation Act and bilateral agreements with source countries. Cultural property imported without required documentation is subject to seizure and forfeiture (19 U.S.C. §§2609–2610, §1595a), and knowingly dealing in stolen cultural property can be prosecuted under the National Stolen Property Act.
• CITES and Lacey Act. Wildlife products (ivory, tortoiseshell, certain corals, exotic skins) require permits and may be prohibited. Failure to comply produces seizure and criminal exposure separate from customs duty.
• Sanctions and export controls. OFAC sanctions and Bureau of Industry and Security export controls restrict trade with sanctioned countries and parties; trade through restricted channels triggers civil and criminal penalties beyond duty.

Common planning approaches

• Accurate HTS classification. Misclassification carries penalties and risks; precise classification on entry is the foundation. A painting that qualifies under HTS 9701 is duty-free; the same work classified as decorative manufacture would attract duty.
• Documentation of provenance and value. Customs value disputes are routinely resolved on invoice documentation; transparent and contemporaneous records are the principal defense.
• Use of customs brokers. Licensed customs brokers handle entry, classification, and bond posting. For high-value luxury imports, a broker experienced in art or vessel imports is standard practice.
• Bonded warehouse staging. Holding imported merchandise in bonded warehouse defers duty and use tax until final disposition is determined.
• Carnet for loaned works. Exhibitions and dealer shows routinely move under ATA Carnet to avoid duty and bond cost.
• Vessel cruising permits. Foreign-flag yachts visiting U.S. waters operate under cruising permits rather than formal entry, deferring duty exposure for vessels not intended for U.S. sale.

Recent developments

Since April 2025 the U.S. has moved through four tariff regimes in quick succession — IEEPA reciprocal tariffs, their invalidation by the Supreme Court in February 2026, the temporary Section 122 surcharge, and the Section 301 forced-labor tariffs effective 24 July 2026. Swiss watches alone have faced rates of 10%, 39%, 15%, 10%, and now a 12.5% all-in level. Importers who paid IEEPA duties have pursued refunds following the Supreme Court decision.

Customs-value declarations on art and antiques remain an enforcement area, and the declared value also feeds state use-tax assessments on the same import.

The Anti-Money Laundering Act of 2020 added persons engaged in the trade of antiquities to the Bank Secrecy Act's definition of financial institution, effective only once FinCEN issues implementing regulations (an advance notice of proposed rulemaking was published in 2021), and directed a study of the art market. While not technically a customs-duty rule, the AML overlay materially changes the diligence environment for high-value imports.

Reviewed October 2026