Landed Cost for Apparel Imports: The Complete 2026 Guide

In this cluster

This page is for a brand founder or ops lead who has an FOB quote in hand and needs to know what that garment actually costs once it is sitting in the DC. It is the cluster pillar for the Yarnstick knowledge base section on landed cost and duty, and it owns the full cost stack and the method. The rate detail, the classification rules and the freight comparison each live in their own article, linked below. Everything here is dated 16 August 2026, because in the last twelve months the duty layer alone has been rewritten three times.

What is landed cost? Definition, formula and the number it is not

Landed cost definition: the total cost of one unit of merchandise delivered into your own warehouse — the price of the goods plus every transport, insurance, duty, government fee, clearance and handling charge incurred on the way there. Landed cost means the figure you divide into sellable units before you set a wholesale or retail price, not the figure the factory quoted you.

The landed cost formula is a sum, not a multiplier:

Total landed cost = entered value of the goods + freight + insurance + duty and additional tariffs + government fees (MPF and HMF) + clearance, compliance and quality costs + inland delivery.

Run that sum against real invoices and you have a landed cost calculation you can defend line by line. Apply a 1.25x rule of thumb instead and you get a number that was roughly right in 2024 and is wrong by more than fifteen points of FOB today, for reasons set out in the next section. If you only need the duty and fee layer for a single style, the apparel import duty calculator walkthrough runs that part of the arithmetic on its own.

Terms people use for this. Landed cost, total landed cost, landed costs and delivered cost all name the same figure, and the singular and plural are used interchangeably in the trade: a buyer asking for the landed cost meaning and a finance lead asking for the landed costs meaning want the same answer. Sources word the landed costs definition differently, but every version contains the same four families — goods, transport, duty and government fees, and handling. This page uses "landed cost" throughout.

FOB vs landed cost: why the two numbers are never the same

FOB is a price for goods at a named origin port. Landed cost is that price plus everything it takes to get the goods into your building. On the worked order below, the FOB vs landed cost gap is 41 to 53 percent of the FOB price, and almost none of it is negotiable with the factory — it is freight, duty, government fees and US-side handling. Comparing one supplier's FOB quote against another's DDP quote, or against your own landed cost, is the most common costing error in apparel.

What landed cost includes for an apparel import

Landed cost is every dollar spent between the factory finishing the garment and the carton being received at your distribution centre, divided by the units you can actually sell. Most brand cost sheets carry three of those lines. A complete one carries fourteen. Terms used below without explanation are defined in the Yarnstick glossary of sourcing and customs terms.

This matters more in 2026 than it did in 2024 for arithmetic reasons. For a cotton knit tee from Bangladesh or India, duty and government fees alone now add roughly 27 percent on top of FOB, against 16.5 percent before the 2025 to 2026 tariff changes. Sheng Lu's FASH455 tracker put the average applied rate on all US apparel imports at 14.7 percent in January 2025 and 35.1 percent by December 2025, a decades high. A brand still pricing off a 1.25x FOB rule of thumb is pricing off a world that no longer exists.

The complete landed-cost stack for an ocean apparel import, with typical 2026 magnitudes. Freight and tariff figures are as of 16 August 2026 and move fast.

Worked example: 10,000 cotton tees from Chittagong to Savannah

Every line below is real, dated and reproducible. The basis is 10,000 pieces of a 180 gsm cotton jersey crew tee bought FOB Chittagong at $4.30, shipped in one 40ft high-cube container to Savannah, entered in August 2026 under HTS 6109.10.00 at a 16.5 percent general rate, with the 10 percent Section 301 forced-labor tariff applicable to Bangladesh origin.

Landed cost of a 10,000-piece cotton tee order, FOB Chittagong to a Savannah DC, August 2026. Duty rates are illustrative of method; verify every line against the current HTSUS before you quote it.

Four things fall out of that table, and they are the reason to build it line by line rather than apply a multiplier.

Duty and fees alone are about 27 percent on top of FOB. Adding the two duty lines, MPF and HMF gives $11,598 on a $43,000 entry, or 26.97 percent. That is the single biggest change in apparel economics since the Multi-Fibre Arrangement quotas were phased out in 2005, and if you were importing through 2025 it also means some of the duty you already paid rests on authority that was later struck down. See IEEPA tariff refunds for apparel importers.

The container is half empty and you are paying for the air. A 40ft high-cube holds roughly 20,000 to 25,000 folded and polybagged tees. This order fills fewer than half of them, which is why freight lands at $0.94 a unit instead of the $0.15 to $0.30 a full box would give. Consolidating two purchase orders into one container is often worth more per unit than the price concession you are negotiating with the factory.

Freight swings the answer by about 11 percentage points. The same order lands at 141 percent of FOB on a structural rate and 153 percent at the August 2026 peak. Peak-season surcharges, not base rates, are what damage Q3 margin. The ocean versus air freight for apparel article carries the lane-by-lane detail.

Duty is assessed on the FOB value, not on the $65,687. That deserves its own section.

Duty is assessed on entered value, not on landed cost

This is the most common and most expensive misunderstanding in apparel importing, and it runs in both directions.

The dutiable amount is the entered value of the merchandise, which for an FOB or FCA transaction is the price actually paid or payable for the goods. In the worked example above, the 16.5 percent general rate and the 10 percent additional tariff are both applied to $43,000, not to the $65,687 total. Freight, marine insurance and US inland delivery are not part of entered value on those terms.

The trap sits on the other side. Brands buying CIF often receive a single invoice figure that already contains ocean freight and insurance, then declare that figure as the entered value. At a 26.5 percent total duty layer, declaring $9,544 of freight and insurance inside the value of that Bangladesh order hands CBP an extra $2,529 on a shipment where nothing else changed. That is not an aggressive position. Entered value is the price paid for the goods; freight is a separate service.

Two practical actions follow. Ask suppliers selling on CIF or CFR to break goods, freight and insurance onto separate invoice lines, and confirm with your broker how the entry is filed. Then pull three recent entry summaries and compare the declared value against what you actually paid the factory. If declared value is systematically higher, you have been paying duty on your own freight bill. The Incoterms for apparel brands article covers which terms create this exposure.

Because duty is charged on the price of the goods, valuation itself is a lever. That is the basis of the first-sale rule, and why the doctrine is under more pressure in 2026 than it was at a 16.5 percent duty rate. See first sale valuation and duty drawback.

Government fees on an apparel entry: MPF and HMF

Two federal fees apply to nearly every commercial apparel entry, and they behave in opposite ways.

The Merchandise Processing Fee is charged at an ad valorem rate of 0.3464 percent, unchanged since 2011, but it is bracketed. For FY2026, running 1 October 2025 to 30 September 2026, the minimum is $33.58 per entry and the maximum is $651.50, set by CBP Dec. 25-10 in the Federal Register. From 1 October 2026 the FY2027 figures rise to $34.58 and $670.86. Because the fee caps out at an entered value of roughly $188,000, MPF is a rounding error on a full container and a meaningful cost on a small air shipment, where the minimum dominates.

The Harbor Maintenance Fee is 0.125 percent of cargo value under 19 CFR 24.24, applies to ocean imports only, and has neither a minimum nor a maximum. Air and truck imports pay none. Because HMF is uncapped, it overtakes MPF on any ocean entry above roughly half a million dollars in value. Full treatment of both, plus the vessel and aircraft arrival fees, is in MPF, HMF and the other customs fees on an entry.

One knock-on effect deserves flagging. Continuous bond amounts are set at 10 percent of the duties, taxes and fees paid in the prior twelve months, floor $50,000. Apparel duty rates roughly doubled, so bond requirements did too, and many brands received bond-insufficiency notices and port holds without changing anything about how they buy.

The landed-cost lines most apparel brands leave out

The lines above are the ones a forwarder or broker invoices you for. The lines below never appear on a forwarder's invoice, which is exactly why they are missing from most cost sheets. They are still real money.

Costs that sit outside the freight and customs invoice, with the effect on the 10,000-piece, $43,000 tee order used above.

The rework line is the one worth internalising. An AQL 2.5 inspection on a lot this size draws 200 pieces and passes at up to 10 major defects, which is 5.0 percent of the sample, so a passing lot is not a perfect lot, and a failing lot triggers 100 percent sorting, rework and a re-inspection fee. Budget nothing for it and every quality event comes straight out of margin. See AQL inspection for brand owners.

How the Incoterm changes which landed-cost lines you pay

The Incoterm does not change what it costs to move a container from Chittagong to Savannah. It changes who buys each service, who carries the risk, and how much of the cost you can see.

Which landed-cost lines the seller has already paid, by Incoterm. Based on Incoterms 2020 as published by the International Chamber of Commerce.

One point of vocabulary before the table is used. The FOB in Incoterms is not the FOB that appears on a US domestic purchase order or in a set of accounts, where the terms are FOB destination versus FOB shipping point in accounting and the question is when title and risk pass between two US parties.

Three points matter for an apparel program. FOB was written for bulk cargo, and the ICC recommends FCA for containerised freight, which is essentially all apparel. CIF supplies only ICC Clauses (C), a named-perils cover that frequently excludes theft and pilferage, and apparel is theft-attractive. DDP puts the importer-of-record burden on a foreign seller with no US customs bond and no ability to defend a classification, and removes your access to first-sale valuation and duty drawback.

How to calculate landed cost for an apparel import, step by step

1. Fix the commercial basis. Record the Incoterm, unit price, quantity and currency for every style. An FOB price and a DDP price are not comparable until you know which lines each already contains.
2. Classify every style. Determine the HTS subheading for each garment and pull the general rate from the current HTSUS. Do not blend one rate across a mixed shipment. See how an apparel HTS code is determined.
3. Establish the entered value. For FOB or FCA, this is unit price times quantity, excluding international freight and insurance. Add assists such as buyer-supplied fabric or trims.
4. Calculate duty and additional tariffs. Apply the general rate, then add any additional tariff layers for the country of origin. They stack on the general rate and are also assessed on entered value.
5. Add the government fees. MPF at 0.3464 percent within the current bracket, plus HMF at 0.125 percent on ocean shipments.
6. Add freight, insurance and inland delivery. All-in freight including surcharges, marine insurance on (invoice + freight) x 1.10, then drayage, chassis and fuel to the DC.
7. Add clearance, compliance and quality costs. Broker entry, ISF, amortized bond, exam fees, pre-shipment inspection, and a realistic demurrage allowance if your lane runs hot.
8. Divide by sellable units, not shipped units. Deduct expected write-offs before dividing. This is the step that turns a cost sheet into a margin model.

Why origin changes the answer before anything else does

Landed cost is now origin-sensitive in a way it was not two years ago, because the additional tariff layer is set country by country. The same $43,000 of cotton tees carries a different duty bill depending only on where they were cut and sewn, with no change to the garment, the fabric or the freight lane. That makes country selection a landed-cost decision, not a purely operational one. The current US import duty rates and Section 301 tiers for clothing article carries the full rate table and the 2026 legal timeline, and comparing India, Vietnam, Bangladesh and China as sourcing origins sets the duty difference alongside FOB, MOQ and lead-time data for the same garment.

One caution before you optimise on rate alone. Country of origin for tariff purposes is set by the cut-and-sew country under 19 CFR 102.21, but forced-labor enforcement follows the input. Chinese-origin cotton, yarn or fabric in a Vietnamese or Bangladeshi garment still exposes the shipment to detention under the Uyghur Forced Labor Prevention Act, and a detained container accrues storage and demurrage while you build the documentation. That risk belongs in the landed-cost conversation. See UFLPA compliance for apparel brands.

Frequently asked questions