Dropshipping 101: Beginners Guide To AliExpress Export Duty
If you're not careful duty which is another word for tariffs will not only eat away all you profit margins, you may even end up taking a loss.
What is duty?
Duty is a form of tax which your government imposes on you when you import products from another country. Why did they do this? To answer this question let's say you lived in New York City in the United States and you want to start a t-shirt business. You have two options buy local or buy from abroad. Your first option is to buy custom-made pieces from a supplier in China for $5 each. The second option is to buy a similar quality t-shirt from a supplier in Los Angeles for $7 each.
If you're ordering a thousand t-shirts, there is no better place to find a good supplier than SaleSource. Chances are you opted for the Chinese supplier, because you had save around $2,000. this is where your local government steps in and charges you attacks for choosing an international supplier over a local source. The common wants you to buy local products because great it creates jobs, keeps the money in the country and they collect more taxes. Let's look at the breakdown of the true cost after you pay duty.
If you were to order tea shares from China with an MOQ of 1000 for an FOB of $5 each your total cost would be around $5,000. Say shipping is another $200, so now you're up to fifty two hundred US dollars now fact place duty which is for your product which will cost your own $800 so your grand total is $6,000.
Let's say what happens if we're to source a product a comparative or a comparable t-shirt from United States at $7 each, since the domestic shipping is cheaper and there is no duty your granddaughter would be around 700 which could be going farther to the $7000.
Certainly you're not saving as much money as you were before and the question is do you want to save a thousand dollars or do you want to charge more for your products and promote the fact that you sell made in USA t-shirts?
So as you can see Duty is there to level the playing field and give local companies a shot at competition with international suppliers. How's the tariff calculated? Every country has a unique formula for calculating duty but for the most part it depends on three factors:
• the country of origin of the product
• the type of product you are importing
• the total value of the goods you are bringing into the country
The country of a region plays a large role in the calculating tariffs. A t-shirt from China will be taxed differently than a t-shirt from Bangladesh. You can negotiates tariffs with other countries based on their own treaties. For example under NAFTA the North American Free Trade Agreement the United States has an agreement that most goods flowing in from either Mexico or Canada are duty-free. Meaning if you are in United States and you're importing deserts from Canada you wouldn't pay any guys that's not the case if you're importing t-shirts from China or Bangladesh, for more info visit: https://salesource.io/.
Tariffs are also calculated based on the type of products and the materials that are used to make the product a plastic toy from China could be taxed at 5% various leather boots from Italy could be taxed at 7%. Again the local government decides these cost pays on a number of factors. So before you import products make sure you have an idea of how much you would be paying in terms of duty.
