Why Your Competitor Appears to Pay Less in Duties

When you’re in the middle of a shipment and hear of your competitor’s products hitting the U.S. market at a lower landed cost, it’s hard not to ask the obvious question: How are they getting away with that (or rather, how long CAN they get away with that)?

It’s not because they’ve cracked some secret shipping hack. The answer often comes down to one document and what you can’t see on it.

The Illusion of the Bill of Lading

Every shipment rides in on a Bill of Lading. It’s basically the boarding pass for cargo. It’s public, so anyone with a scraper and some spare time can harvest that info, package it, and sell it. Happens all the time. That’s how companies (think they can) spy on each other’s imports.  It makes for great meetings in the boardroom, with Supply Chain and Trade Compliance fidgeting in front of management.  A little knowledge is a dangerous thing.

But here’s the problem: a Bill of Lading only tells you just enough to get jealous. It shows who shipped, from where, and when. But the description of the goods on the Bill of Lading may not always be 100% accurate to the finest little detail. 

What it doesn’t show is the contents of the box and their associated tariff classifications, which is the only part that really affects duty rates. That’s tucked away in a different document altogether.

The Hidden Number That Really Matters

The tariff code doesn’t show up on the Bill of Lading. It lives on the Import Declaration, a private conversation between the importer and the government. The import declaration is confidential as a tax return, because it is, actually, a tax filing.  Duties are taxes.

So, while you’re thinking “Why are they paying so much less?”, the real answer is sitting in a classification you can’t see. Two similar products on paper can land under two very different duty rates. One importer pays more. One pays less. One is using the correct HTS classification, and one is not. Guess which one is at greater risk of an audit.

To outside eyes, it looks like magic, or unfair play. In reality, it’s often just a shell game of information.  

The Cost of Kicking the Can

If your product is misclassified, you’re doing two things at once: overpaying duties and setting yourself up for an expensive audit. And here’s the fun part: going back to “fix” years of bad classifications is far more painful than getting it right up front.

That’s why smart importers treat tariff codes with the same precision as pricing strategy. Think of it this way: it’s always cheaper to measure twice and cut once. Customs doesn’t hand out mulligans.

Even the Playing Field

At O’Meara & Associates, we make sure importers stop donating money to Customs and start competing on a level playing field.

Because the only thing worse than overpaying duties is realizing your competitor never did. Contact us today and level the playing field on duty rates.