Published March 30, 2026
The number one financial mistake new importers make is confusing FOB price with landed cost. The unit price a Chinese factory quotes you — $2.00, $5.00, $12.00 — is what the factory charges to get your goods to a Chinese port. It has nothing to do with what those goods cost by the time they're sitting in your warehouse, ready to sell.
Landed cost is the sum of every expense between the factory floor and your warehouse. Depending on the product, it runs 60-150% above FOB price. For some high-tariff product categories, the gap is even wider.
Here's every cost you need to account for, worked through with a real example.
We'll use a product we know well: a 500ml HDPE water bottle, $2.00 FOB Shenzhen, 10,000 units. This product's HTS code lands it in a category with a moderate combined tariff rate — we'll use 32% (MFN 6.5% + Section 301 25% + IEEPA 0.5%) as the baseline, but verify your specific rate at lgistics.ai before using any number you find in an article.
Total FOB value: $20,000
Now let's build to landed cost.
Before your goods can be loaded on an ocean vessel, they need to get from the factory to the port. For Shenzhen to Yantian Terminal (main Shenzhen export port), this is a short haul — $200-400 for a 20-foot container or equivalent LCL booking. For inland factories (Chengdu, Wuhan, inland Zhejiang), inland freight to Shanghai or Guangzhou can be $800-1,500.
For our example: $0.03/unit ($300 total for an LCL shipment)
Your Chinese supplier or freight forwarder handles export customs clearance. This includes the export declaration, customs examination if triggered, and terminal handling charges at origin. Standard cost is $150-300 per shipment, largely fixed regardless of shipment size.
For our example: $0.02/unit ($200 total)
The main freight cost depends on whether you're shipping FCL (full container load) or LCL (less than container load), origin port, destination port, and current market rates.
Current market rates fluctuate significantly — they spiked dramatically in 2021-2022, normalized in 2023-2024, and remain above pre-pandemic levels in 2025-2026 for most trade lanes. Rough benchmarks for current rates:
10,000 water bottles in a standard case pack (48/carton, 0.04 CBM/carton) occupy roughly 8-9 CBM. At $80/CBM LCL to Los Angeles, that's $720 in ocean freight.
For our example: $0.07/unit ($720 to LA)
Insurance is technically optional but practically mandatory for any shipment over $5,000. Standard marine cargo insurance runs 0.3-0.8% of cargo value. On $20,000 of goods, that's $60-160.
For our example: $0.01/unit ($100 total)
This is the big one for China-sourced goods in 2026. The calculation:
Dutiable value = FOB + ocean freight (simplified — customs uses CIF value in some calculations, but FOB is acceptable for most informal entries)
At FOB + freight, our dutiable value is approximately $20,720.
Combined tariff rate for this product: 32% (MFN 6.5% + Section 301 25% + IEEPA 0.5%)
Import duties = $20,720 × 0.32 = $6,630
Per unit: $0.66
This is the number that shocks most new importers. A $2.00 FOB bottle generates $0.66 in import duties. That's before it touches any US soil.
Before you finalize your import calculations, look up your exact HTS code and current combined rate. Section 301 tariff rates vary by product subheading, and IEEPA rates have category-specific variations that aren't captured in any single percentage. Using the wrong rate leads to seriously wrong cost models.
The Harbor Maintenance Fee is assessed on commercial cargo at 0.125% of the declared value. On $20,000 of goods, that's $25. Small, but real.
For our example: $0.003/unit ($25 total)
CBP charges an MPF on formal entries (shipments over $2,500). The rate is 0.3464% of cargo value, with a minimum of $31.67 and maximum of $575.35 per entry. For a $20,000 shipment, MPF = $69.28.
For our example: $0.007/unit ($69 total)
Any formal entry requires a customs bond — either a single-entry bond (roughly 0.5% of duty value, minimum $50) or a continuous bond ($500-600/year covering all entries). If you're importing more than $40,000-50,000 in dutiable value per year, a continuous bond is more economical.
For our example (single-entry): $0.003/unit ($33 total)
A licensed customs broker handles your import entry filing. Standard fee for a routine entry: $150-300. For entries with complex classification questions, AD/CVD involvement, or FDA prior notice requirements, fees can be higher.
For our example: $0.02/unit ($200 total)
Arrival charges at the US port include terminal handling fees, chassis fees (for container cargo), and potentially port congestion surcharges or peak season surcharges. For LCL, a drayage and deconsolidation fee applies. Typical range: $250-600 per shipment.
For our example: $0.04/unit ($400 total)
Final delivery from port to your warehouse. Depends on distance — a warehouse 30 miles from the port is different from one in Kansas City. Typical LTL delivery to a warehouse within 100 miles of the port: $200-400. Cross-country: $400-800.
For our example (warehouse near LA): $0.03/unit ($300 total)
If you're using a third-party logistics provider, they charge for receiving, counting, inspecting, and put-away. Typical receiving fee: $0.25-0.50 per carton, or $25-50 per pallet.
For our example (208 cartons at $0.35/carton): $0.007/unit ($73 total)
| Cost Component | Per Unit | Total (10k units) | |---|---|---| | FOB factory price | $2.00 | $20,000 | | China inland freight | $0.03 | $300 | | Export handling | $0.02 | $200 | | Ocean freight | $0.07 | $720 | | Cargo insurance | $0.01 | $100 | | Import duties (32%) | $0.66 | $6,630 | | Harbor maintenance fee | $0.003 | $25 | | Merchandise processing fee | $0.007 | $69 | | Customs bond | $0.003 | $33 | | Customs brokerage | $0.02 | $200 | | Destination port charges | $0.04 | $400 | | Domestic freight | $0.03 | $300 | | 3PL receiving | $0.007 | $73 | | Total landed cost | $2.89 | $29,050 |
That $2.00 FOB bottle lands at $2.89 — a 44.5% premium over the quoted price. Duties alone represent 23% of landed cost.
Using the wrong tariff rate. Section 301 tariffs are product-specific. Rates range from 7.5% to 25%+ within the same broad category. A plastics product in one HTS subheading might be 7.5%; an adjacent subheading is 25%. This isn't an edge case — it's routine. Verify your specific code.
Forgetting IEEPA tariffs. IEEPA tariffs were added on top of Section 301 tariffs in 2025 and represent an additional layer of duty that wasn't in any landed cost model built before 2025. Many importers are still calculating without them.
Ignoring the customs bond for large importers. If you're doing more than a few shipments per year, a continuous bond costs $500-600 and covers unlimited entries. Single-entry bonds at 0.5% of duty value cost far more at scale.
Not budgeting for defect-related costs. If 3% of your goods fail inspection or are returned by customers, that cost is effectively spread across the remaining units. On a $29,000 shipment, a 3% failure rate adds roughly $0.09/unit in effective cost. Not captured in any standard landed cost model, but real.
For context on when these landed costs make US manufacturing competitive instead, see our US vs China cost comparison. For a deep dive on the tariff components specifically, see our China tariffs guide. For a step-by-step walkthrough of every cost component with a worked example, see how to calculate landed cost from China.
Landed cost is the only number that matters for importers — not FOB, not CIF, not the number you saw on an Alibaba listing. Build your full cost model before you commit to a supplier, and build it with current tariff rates, not rates from a year ago or from a supplier who told you the tariff is "only" a certain percentage.
The calculation above is a template. Apply it to your specific product with your specific HTS code, your actual freight costs, and your warehouse location, and you'll have a number you can actually make business decisions on.
Ready to source?
Not sure how tariffs affect your costs? Get quotes from both US and China manufacturers to compare real landed costs. Or use lgistics.ai to audit your current HTS classifications.