Importing from China: Understanding landed costs and tariff impacts

Importing goods from China involves complex cost calculations known as landed cost, which includes the purchase price plus transport, insurance, customs, VAT, and additional fees. In practice, these total costs can be 25% to 50% higher than the initial invoice amount from the supplier. The final cost is heavily influenced by Incoterms, such as EXW, FOB, or CIF, which determine whether the buyer or seller is responsible for shipping and insurance.

Customs duties are calculated based on the customs value, which is the sum of the product price, transport, and insurance to the EU border. Beyond direct costs, trade policies and tariffs have broader economic implications. While intended to protect domestic markets, tariffs often lead to increased prices for consumers, reduced product availability, and shifts in supply chains as companies seek alternative suppliers to mitigate rising expenses.