New US Section 301 Tariffs on Brazilian Goods Raise Sourcing Costs
Importers face a flat 25 percent additional duty on Brazilian footwear, machinery, furniture, ethanol, and sugar.
Landed Cost Calculation
Total Valuation
Mathematical models for import valuation include every expense incurred from the factory floor to the final warehouse destination. An accurate landed cost calculation accounts for the original price of the goods and the expenses related to freight, insurance and customs duties. This figure provides the true cost of an item and is the only basis for determining the actual profit margin.
Expense Allocation
Indirect costs such as bank fees, terminal handling charges and local trucking fees must be added to the base price of the product. In a landed cost calculation, these expenses are often distributed across a shipment based on the weight or the value of each item. This detailed tracking ensures that low value items are not unfairly burdened with high transport costs.
Accounting software automates this process by pulling data from multiple sources to create a complete picture of the transaction. A precise allocation of costs is necessary for setting retail prices that cover all expenses.
Profit Protection
Comparison of the final delivered cost against the selling price identifies products that are no longer viable for the market. Regular use of landed cost calculation allows a business to adjust its sourcing strategy when shipping rates or taxes rise. If the cost of importing a product becomes too high, the company may look for a domestic supplier or a different geographic region.
This analysis is a requirement for maintaining the financial health of an import business. Understanding every component of the final price prevents unexpected losses.