Import from China Cost Calculator

Setting it out

The total cost of importing from China is the ex-works or FOB unit price, plus inland transport to the port and export clearance if buying EXW, plus ocean or air freight, plus insurance, plus duty at the applicable rate including any additional trade measures, plus import tax, plus destination charges and inland delivery.

The term that most often makes or breaks the calculation is not the freight; it is whichever additional tariff measure applies to the commodity and origin combination, because those rates can exceed the ordinary duty several times over.

A concrete case

1,000 units at $18 FOB Shenzhen, $18,000. Sea freight to a west coast port, $2,400 for the LCL consignment. Insurance $95.

Ordinary duty at 6.5% on the $18,000 FOB value is $1,170. Destination terminal handling, customs entry, brokerage and inland delivery add $945.

Landed cost is $22,610, or $22.61 a unit. Now add a 25% additional tariff on the commodity: duty rises to $5,670, landed cost to $27,110, and the per-unit figure to $27.11, a 20% increase in cost of goods from a single policy line.

What the number hides

Quoted unit prices from Chinese suppliers are frequently EXW even when described loosely as FOB, and the difference: inland trucking to the port, export customs, terminal charges at origin, commonly runs 3% to 6% of goods value. Confirming the term in writing before comparing quotes is essential.

Tooling and mould charges are the other common omission. A $3,500 tooling charge amortised over a first order of 1,000 units is $3.50 a unit, which is nearly 20% of the goods cost and rarely appears in the landed cost spreadsheet.

Where to go from here

Get every quote on the same incoterm, FOB port of loading is the usual choice, so the numbers are comparable. A lower EXW price frequently lands higher than a higher FOB one.

Then verify the current tariff position for your specific commodity code and origin before committing. This is the input that has moved most in recent years and the one where a stale figure is most expensive.

Payment terms and the risk they carry

The conventional structure is 30% deposit on order and 70% against a copy of the bill of lading, which balances the supplier's need for working capital against your need not to pay for goods you have not seen.

Paying 100% in advance is common for small first orders and it is the arrangement with the least recourse. Where the amount is material, a letter of credit or an escrow arrangement through the trading platform costs a small percentage and converts a trust relationship into a documented one.

Third-party inspection before the balance payment is the other control worth using. An inspection costing $300 on a $18,000 order is 1.7% and it is the only point at which you can decline the goods while still holding 70% of the money, which is a materially stronger position than discovering a quality problem after the container has arrived.