All tangible articles are dutiable when imported except for U.S. goods returned meeting certain preconditions, previously imported goods meeting certain preconditions, goods subject to special duty free provisions, and products returned from outer space. Intangibles, such as electricity, are not dutiable. Customs duties are determined by the customs classification and valuation of the merchandise. Both customs classification and valuation are based on international agreements. The U.S. and other members of the World Trade Organization have also adopted the Customs Valuation Code, which is used to determine the value of imports.
Classifications proceed from the simplest goods to the most complex.
Duty rates are associated with each classification. The column 2 rates are generally very high. Many imports qualify for duty free or reduced duty treatment. Other preference programs include the U.S. - Israel Free Trade Agreement, imports from U.S. insular possessions, and the Caribbean Basin and Andean duty free programs. Items such as selling commissions, assists, royalties, and the proceeds of a subsequent resale accruing to the exporter, are added to transaction value.