Summary
Landed cost calculation for apparel means adding freight, insurance, import duty, the Merchandise Processing Fee (0.3464% of entered value), the Harbor Maintenance Fee (0.125% on ocean shipments), and customs broker fees to your factory’s FOB price. Duty depends on your HTS classification; knit garments fall under Chapter 61, woven under Chapter 62, and the rates differ. Most first-time importers are under-budget by 25–40% because they price off the factory quote alone.
The Quote Is the Beginning of the Math, Not the End
A factory quotes you $9.00 per t-shirt. You build your entire transparent pricing, no hidden costs model around that number, set a retail price, calculate your margin, and feel good about it.
Then the goods arrive, and you’re staring at line items nobody mentioned: a broker fee, a Merchandise Processing Fee, a Harbor Maintenance Fee, and a duty bill that lands harder than expected. The real cost per shirt sits closer to $14 than $9.
This gap, consistently 25–40% for first-time importers, isn’t caused by dishonest suppliers. It’s caused by a factory quote being exactly what it says it is: the price of the goods, at the factory, before anything moves. Everything else is your problem, and nobody sends you a checklist.
Here’s that checklist.
The Landed Cost Formula
Landed Cost = Goods Value + Freight + Insurance + Duty + MPF + HMF + Broker Fees
Seven components. Most founders budget for one. Let’s take each in turn, then run a full 500-unit order through the whole thing.
HTS Codes: Where Your Duty Rate Comes From
Every imported garment gets classified under an HTS code, a Harmonized Tariff Schedule number that determines the duty rate applied at the border. This isn’t administrative box-ticking. It’s the input that drives your single largest variable cost, and the place first-time importers most often go wrong.
Chapter 61 vs. Chapter 62: The Classification Trap
The tariff schedule splits apparel by fabric construction, not by garment type:
- HTS Chapter 61, knitted or crocheted apparel. T-shirts, jersey polos, knit hoodies, sweatshirts, and knit dresses.
- HTS Chapter 62, woven apparel. Button-down shirts, woven trousers, denim, tailored jackets, and woven outerwear.
Here’s where founders get caught: the distinction is about how the fabric was made, not what the garment looks like. A “shirt” could be either. A polo is almost always knit (Chapter 61); a button-down oxford is woven (Chapter 62). Within each chapter, rates shift again based on fiber content, cotton, synthetic, or blend, and sometimes on construction details like whether a garment has a collar or specific closures.
Why misclassification is both a cost and a compliance problem: if a freight forwarder guesses your classification and guesses low, you underpay duty. CBP can issue a retroactive bill when it catches the error, potentially covering multiple past entries, and incorrect classification can carry penalties beyond the duty shortfall itself. If they guess high, you’ve simply overpaid, often for months, with a refund process that’s slower and more painful than getting it right the first time.
Get your classification from your customs broker, in writing, before your first order ships. And verify the current rate yourself at the official source: the USITC Harmonized Tariff Schedule is free, searchable, and authoritative. We’re deliberately not quoting specific duty percentages in this article, because rates have moved significantly in recent years and a stale number in a blog post is worse than no number at all.
Ad Valorem Duty: How the Charge Actually Works
Apparel duty is ad valorem, assessed as a percentage of the customs value of your goods, not a flat fee per garment. Two practical consequences:
First, your duty bill scales directly with your goods’ value. Negotiating a lower FOB price reduces your duty in absolute dollars, which is a second-order benefit most founders don’t account for.
Second, the percentage impact on your landed cost stays constant regardless of price point. A $5 t-shirt and a $50 jacket at the same duty rate both see landed cost inflate by the same proportion, which is why low-price, high-volume programs feel the squeeze just as sharply as premium ones.
Incoterms 2020: Who Pays for What
Incoterms 2020 are the standardized international trade terms defining exactly where the seller’s responsibility ends and yours begins. Confusing them is the single most common source of “I was billed for freight I thought was included.”
| Incoterm | Factory Covers | You Cover | Right For |
| EXW (Ex Works) | Goods available at their facility, nothing more | Export clearance, all freight, duty, customs, delivery | Experienced importers with an established forwarder |
| FOB (Free On Board) | Goods loaded onto the vessel at origin port | Ocean freight, insurance, duty, clearance, delivery | Growing brands building freight capability |
| CIF (Cost, Insurance, Freight) | Freight and insurance to your destination port | Duty, clearance, delivery from port | Buyers wanting shipping certainty without managing it |
| DDP (Delivered Duty Paid) | Everything: freight, duty, clearance, delivery | Nothing beyond the quoted price | First-time importers, and anyone who wants one number |
Which to ask for, by stage:
- First import ever: ask for DDP. The per-unit price is higher because the factory prices in the risk and handles the complexity, and that premium is often worth paying to avoid the exact surprise-fee spiral this article exists to prevent. One number, no line items you didn’t expect.
- Second or third order: move to FOB and engage your own freight forwarder and customs broker. This is where real savings appear once you have the relationships to manage the handoffs.
- Established and shipping regularly: EXW can deliver the lowest total cost, but only with a forwarder you trust handling origin-side logistics. Attempting EXW on a first import is how goods sit at a foreign port with nobody managing them.
The critical misunderstanding worth stating plainly: FOB does not mean “the price you see is the price you pay.” FOB explicitly excludes ocean freight, insurance, duty, customs clearance, and final delivery, which together often exceed 30% of the goods value.
The Government Fees Nobody Warns You About
Two federal fees appear on essentially every commercial import entry, independent of duty.
Merchandise Processing Fee (MPF), 0.3464% of entered value, with a FY2026 minimum of $33.58 and a maximum of $651.50 per formal entry. Because it’s capped, it hits small shipments proportionally harder than large ones.
Harbor Maintenance Fee (HMF), 0.125% of cargo value, applied to ocean shipments only, with no minimum and no cap. It doesn’t apply to air freight, which occasionally matters for mode-of-transport decisions on high-value, low-weight goods. The rate is set by statute and hasn’t changed since 1987.
Neither appears on a factory quote. Both appear on your entry summary.
ISF Filing: The One That Holds Your Goods
ISF (Importer Security Filing), known as “10+2,” is a mandatory advance filing for ocean freight into the US. Ten data elements come from the importer or their broker, two from the carrier, and the filing must be submitted at least 24 hours before cargo is loaded onto the vessel at the foreign port, not 24 hours before arrival in the US.
That timing distinction is exactly why founders report goods held at customs. Miss the window and you face potential penalties and a shipment that isn’t going anywhere quickly.
The fix takes one email: before your goods leave the factory, confirm in writing with your freight forwarder or broker who is filing the ISF and by what date. Never leave this ambiguous between you, your factory, and your forwarder, that ambiguity is where missed filings live.
Do You Need a Customs Broker?
For commercial shipments valued over $2,500, which covers virtually every real apparel order, a formal customs entry is required. You can legally self-file as an importer of record, but almost nobody at startup scale should.
A licensed customs broker files your entry, confirms your HTS classification, manages the ISF, and handles the government fee calculations. Fees typically run $150–$300 per entry, sometimes more for complex shipments. That’s a real, budgetable line item and cheap relative to the cost of a misclassified entry or a missed filing.
One related term worth knowing: a bonded warehouse is a secured facility where imported goods can be stored before duty is paid, letting you defer the duty payment until goods are withdrawn for sale. For most startups this is unnecessary complexity, but if you’re importing a large seasonal buy well ahead of sell-through, it’s a cash-flow tool worth asking your broker about.
A Worked Example: 500 T-Shirts, End to End
Let’s run a real order: 500 cotton knit t-shirts (HTS Chapter 61), quoted FOB at $9.00 per unit.
| Line Item | Amount | Notes |
| Goods value (500 × $9.00) | $4,500.00 | The factory quote |
| Ocean freight (LCL, shared container) | $580.00 | Varies by route, season, container fill |
| Marine cargo insurance | $25.00 | ~0.5% of cargo value |
| Import duty (ad valorem, verify your rate) | Varies by classification and origin | Your largest variable, confirm on USITC HTS |
| Merchandise Processing Fee | $33.58 | 0.3464% of $4,500 = $15.59, so the FY2026 minimum applies |
| Harbor Maintenance Fee | $5.62 | 0.125% of $4,500, no minimum |
| ISF filing fee | $50.00 | Typically $35–$75 |
| Customs broker fee | $200.00 | Typically $150–$300 per entry |
| Delivery from port to warehouse | $150.00 | Drayage and local delivery |
| Subtotal before duty | $5,544.21 | $11.09 per unit, already 23% above the quote |
Look closely at the MPF line. The calculated 0.3464% comes to $15.59, but the FY2026 minimum of $33.58 applies instead, a small example of a broader pattern: fixed fees punish small shipments disproportionately. Broker fees, ISF filing, and the MPF floor are largely the same whether you import 500 units or 5,000, which means your per-unit overhead falls sharply as volume rises.
And that’s before duty. Add an ad valorem duty rate on top of the $4,500 goods value, and the per-unit landed cost climbs further, which is precisely how a $9.00 quote becomes a $14.00 reality.
Build the Model Before You Commit
Three habits separate founders who get blindsided from those who don’t:
- Get your HTS classification in writing from a broker before the first order, not after the first entry.
- Ask every quote to be restated as DDP; even if you ultimately ship FOB, it forces a total-cost number into view for comparison.
- Budget the fixed fees separately from the variable ones, because they don’t scale and they hurt most at the volumes startups actually order.
Landed cost isn’t an advanced importing topic. It’s the baseline arithmetic of selling imported goods profitably, and skipping it is why so many first collections quietly lose money on paper that looked fine before the shipment arrived. The same goes for the costs sitting just past the border, like clothing packaging, which belongs in the model too.
Want the full number before you commit? Get a quote from Tack Apparel, and we’ll map the landed cost with you, every line item visible up front, and nothing waiting at customs.
Frequently Asked Questions
How do I calculate the landed cost of imported clothing?
Add your goods value to freight, insurance, import duty (based on HTS classification), the Merchandise Processing Fee, the Harbor Maintenance Fee if shipping by ocean, ISF and customs broker fees, and final delivery. The factory quote alone typically represents only 60–75% of true landed cost.
What is the import duty on t-shirts into the USA?
Duty on apparel is ad valorem and depends on the exact HTS classification; knit t-shirts fall under Chapter 61, with rates varying by fiber content and construction, plus any additional tariff layers by country of origin. Rates change, so verify your specific product on the USITC Harmonized Tariff Schedule rather than relying on a figure quoted elsewhere.
What is the difference between FOB and DDP?
Under FOB, the factory’s responsibility ends when goods are loaded onto the vessel; you pay freight, insurance, duty, and customs clearance separately. Under DDP, the factory covers everything, including duty and delivery to your door for one all-inclusive price. DDP costs more per unit but eliminates unexpected line items.
Do I need a customs broker to import clothing?
For commercial shipments over $2,500, a formal customs entry is required. Self-filing is legally permitted but rarely advisable at startup scale; a licensed broker handles classification, ISF filing, and fee calculation for typically $150–$300 per entry, far less than the cost of a misclassified entry or missed filing.
What HTS code do hoodies fall under?
Knit hoodies and sweatshirts generally fall under HTS Chapter 61 (knitted or crocheted apparel), with the specific subheading depending on fiber content. A woven hooded jacket would classify under Chapter 62 instead. Confirm your exact code on the USITC Harmonized Tariff Schedule or through your customs broker.
