Customs, Duties & Taxes, Tariffs Explained

What Are Customs, Duties, Taxes, and Tariffs? A 2025 Guide for Online Merchants

If your business is selling internationally in 2025, you’re already navigating one of the most volatile global trade environments in years. From shifting tariffs and trade agreements to tightening customs regulations, it’s never been more important for online merchants and marketplace platforms to understand the fundamentals of cross-border fees, and how to manage them efficiently.

In this guide, we’ll break down the difference between customs, duties, taxes, and tariffs, explain how they impact your ecommerce business, and share how to tackle these challenges head-on with modern technology.

What Are Customs, Duties, Taxes, and Tariffs?

Let’s start with the basics:

Customs: The government agency responsible for regulating goods entering or leaving a country. Customs authorities inspect shipments, enforce trade regulations, and collect import fees.
Duties: A type of tax charged on imported goods. Duties are typically calculated as a percentage of the product’s value and are based on its HS (Harmonized System) code, country of origin, and destination country’s tariff schedule.
Taxes: Many countries charge Value-Added Tax (VAT), Goods and Services Tax (GST), or sales tax on imported goods. These are often applied to the combined value of the product, shipping costs, and duties.
Tariffs: Official schedules of duties imposed by governments on certain products. Tariffs can fluctuate due to trade agreements, sanctions, or global political and economic events.

Why These Costs Matter for Online Sellers in 2025

International shipping is no longer just for enterprise brands. Small and mid-sized merchants are now expanding into new markets, and with that comes complex landed costs. Mismanaging duties, taxes, and customs requirements can lead to:

Delayed deliveries at the border
Unexpected customer fees upon delivery
Increased return rates
Lost revenue due to miscalculated shipping costs

Consumers expect fast, transparent, and hassle-free international delivery, so getting landed costs right is a competitive advantage.

The Global Trade Landscape in 2025: What’s Changing?

Recent years have seen a spike in trade policy changes, new import restrictions, and rising tariffs on consumer goods. Key trends shaping in international ecommerce in 2025 include:

Higher duties on apparel, electronics, and health-related products
Updated VAT regulations in major markets like the EU, UK, and Canada
Stricter enforcement of product-specific restrictions (CITES, ITAR, hazmat goods)
Growing importance of accurate HS code classification for customs clearance

With volatility on the rise, relying on manual customs processes or outdated duty calculators just won’t cut it anymore.

And it’s not just new tariffs, it’s how quickly existing codes are revised. Chapter 99 of the Harmonized Tariff Schedule, which covers temporary duties like those from the Trump and Biden administrations, has already been revised 11 times this year alone, compared to just once in 2017. These updates can stack rates on top of each other or selectively override them depending on the product and country of origin.

How to Tackle Customs, Duties, and Taxes in 2025

The good news? There are API-driven tools that can automate and optimize your cross-border shipping processes, ensuring you stay compliant while protecting your margins.

Pitney Bowes International Shipping APIs help online merchants and marketplaces:

Instantly classify products with the correct HS/HTS codes
Accurately calculate duties and taxes for over 200 countries
Check for shipping restrictions and compliance regulations in real-time
Provide fully landed cost estimates at checkout to reduce cart abandonment

Explore the Pitney Bowes International Shipping APIs here

The Bottom Line: Accurate Landed Costs = Better Business

Managing customs, duties, taxes, and tariffs isn’t just a back-office issue. It directly affects customer experience, conversion rates, and operational profitability.

In 2025, smart online merchants are using modern, scalable technology to handle international shipping complexity with confidence. From automated HS code classification to accurate landed cost calculations at checkout, the right tools can turn a major pain point into a competitive edge.

Ready to simplify your international shipping?

Learn how Pitney Bowes International Shipping APIs can help your business stay compliant, save money, and deliver better cross-border customer experiences.

Get started with Pitney Bowes International Shipping APIs today