What is the difference between a “preference” and “non-preference” duty rate?

Preference duty rates are specifically designed for goods that come from designated countries or regions that are part of trade agreements. These agreements often aim to foster trade relationships by reducing tariffs on certain goods to promote economic cooperation. When goods are imported from countries that have a trade agreement with the importing country, they may qualify for a lower or preferential duty rate. This can significantly reduce the overall cost of importing those goods compared to non-preference rates, which apply to goods that do not qualify for such agreements.

In contrast, non-preference rates are standard tariffs that apply to all goods that do not meet the criteria for preferential treatment. This includes goods from countries that do not have trade agreements or those that do not meet specific eligibility requirements set forth in the agreement. Understanding these distinctions can impact both classification and financial planning for importers, as choosing to source from countries with preferential rates can lead to substantial cost savings.