Classification decides the rate
A cotton knitted t-shirt is not classified by the word "t-shirt" but by construction: knitted or woven, fibre content, gender and whether it is a singlet or not. Different headings carry different rates, and additional duties can attach to a heading by origin.
This is why a broker asks for the garment spec rather than the product name. If a supplier tells you "we always ship as t-shirts" without a code, they are guessing, and you are the importer of record.
Duty is charged on the customs value, not the retail price
On FOB terms the customs value is the goods price at the port of export. On CIF terms the freight is inside the price, so duty is charged on the larger number — you pay duty on freight, which is why a "freight included" quote is not always cheaper.
This is a real and frequently overlooked cost: on a 41.5% rate, $0.60 of freight inside the CIF price becomes about $0.25 of extra duty per shirt.
- FOB: duty on goods only. Freight paid separately, not dutied.
- CIF: freight inside the customs value, so duty is charged on it too.
- DDP: the supplier pays duty — and builds it into the unit price, usually invisibly.
The three duty scenarios, on one shirt
Take a plain cotton tee at a FOB price of $2.60 with $0.55 of freight per piece. At a 16.5% rate the landed cost is $3.58. At 41.5% it is $4.23. At 54% it is $4.55.
The spread between the first and the last is 27% of landed cost — bigger than any quantity discount you will negotiate. It is also why a site that prints a single duty rate is publishing a number that will be wrong within a season.
What a customs broker actually does
A broker files the entry, applies the classification, calculates duty, arranges payment and releases the goods. They are licensed, and they charge per entry rather than per piece — which means their cost matters most on small shipments.
On a 100-piece order the entry fee can add $0.30–1.00 per shirt. On 5,000 pieces it is a rounding error. That is one reason small ocean shipments are inefficient and why stock inside the destination country exists at all.
The errors that cost the most
Misclassification: shipping under a general textile heading to get a lower rate, then being reclassified on examination with penalties. Undervaluation: declaring below the invoice to reduce duty, which works until it does not. Missing origin documentation: losing a preferential rate you were entitled to because a certificate was never issued.
All three are the importer’s exposure, not the supplier’s. Ask two questions before the vessel sails: what is the HS code, and what is the declared value per unit.