Trade Talk Blog I
f you are in the market for a tractor, you likely have a few options: you can either buy one locally or import one from another country. But if you want to save money on your next tractor purchase or find the best deal possible, importing a tractor might be right for you. Importing a tractor into the United States is no small feat, though.
With numerous federal and state regulations to comply with, it can be difficult to ensure you meet all of the import requirements. And whether you are an individual interested in bringing in a classic farming machine or a company interested in importing large numbers of tractors, there is plenty of paperwork involved, and it’s important to understand the import process before you begin.
In this blog post, we’ll provide an overview of what you need to import a tractor into the U.S. We’ll also discuss some of the common benefits associated with importing tractors from overseas, such as cost savings and the availability of more choices. By reviewing this information carefully in advance of your purchase, you’ll be able to make an informed decision on what is best for your business. And with the help of an experienced customs broker, you can bring your dream machine home without having to worry about any issues or complications further down the road.
Why should you import a tractor into the U.S.?
The United States already produces heavy equipment such as tractors. However, the U.S. has a high demand for tractors, so it’s not surprising that some are trying to import them from other countries. The United States has established business relationships with Mexico, Japan, Germany, the UK, France, India, and Italy. Importing heavy equipment from these countries can be appealing and easy.
There are several reasons why Americans choose to import tractors, including:
You might be able to find tractors that are cheaper than those manufactured or sold in America. By sourcing a tractor from overseas, you can often find significantly lower prices than what’s available locally. Depending on the size and complexity of the tractor, you could save thousands of dollars or more by sourcing your equipment from abroad.
There’s no guarantee that all American dealers will have the exact tractor model you want in stock at any time. Still, if you buy from abroad, there’s usually more variety available. This gives you more options to choose from and potentially better overall performance due to specialized features or advantages not found in domestically produced models.
Many foreign manufacturers have higher standards for their products than those found in the United States and are held to much stricter measures of quality control. This means that when you buy an imported tractor, you can rest assured that it will meet certain standards and requirements for durability, reliability, and performance.
Importing a tractor may mean access to different technologies from abroad that might not be available here in the U.S., such as fuel-efficient engines or advanced safety features like rollover protection systems that help keep operators safe while operating heavy machinery out on the job site.
Tractor imports to the U.S.
The U.S. is a hub for tractor imports, with engineering vehicles sourced from all corners of the world and used in agriculture and construction. Reliable tractors built by companies based in Japan, China, Canada, or Europe provide transportation solutions to meet diverse needs ranging from pulling trailers and machinery to tow cars. An import strategy can therefore ensure access to robust operations-ready equipment globally produced within shorter cycles at competitive prices.
Bringing a tractor from abroad can be a complex process, whether your purchase comes from Europe, Canada, or China. Each country has its own regulations and rules regarding the exportation of goods that must be kept in mind — especially if importing into the U.S., where Value Added Tax (VAT) also comes into play. To ensure success during this endeavor, it’s recommended to seek out professional assistance by employing the services of a licensed customs broker for help understanding any steps along the way.
Ensuring the safe operation of Chinese imports, such as tractors, demands rigorous standards and testing. The technical specifications must comply with EPA regulations and any other safety requirements set by U.S. law. Moreover, confirming warranties and parts replacements are vital steps, along with mandatory quality control evaluations, before entry into the United States market.
Possible government regulations for importing machinery and tractors
The United States government has specific regulations in place for the importation of machinery and tractors. The Environmental Protection Agency (EPA) is responsible for enforcing regulations concerning air pollution standards, exhaust emissions, fuel economy standards, and labeling requirements. The Department of Transportation (DOT) enforces laws related to highway safety, such as brake performance, visibility, and occupant protection.
To import machinery or tractors into the U.S., importers must adhere to EPA’s Clean Air Act (CAA), which sets standards for allowable exhaust emissions from motor vehicles such as diesel engines used in off-road equipment like tractors. In addition, the CAA requires that manufacturers certify that their vehicles meet federal environmental performance standards and display required labeling before they can be sold in the US market.
The National Highway Traffic Safety Administration (NHTSA) within DOT regulates vehicle safety features like brakes, mirrors, tires, and headlights. Furthermore, all imported motor vehicles must comply with applicable motor vehicle safety standards set by NHTSA, including those related to crashworthiness or occupant protection features like seat belts and airbags.
To import a tractor, you need to submit a completed 3520-21 EPA form and have a customs bond, which can be acquired with the help of a customs broker.
Documents needed for importing machinery and tractors
Four documents are needed to import a tractor into the U.S.:
- Arrival Notice
- The arrival notice informs the consignee that the tractor has arrived and includes information such as the number of cargo units, their contents, and pickup charges.
- Bill of Lading
- The shipper or carrier must send the bill of lading to the owner or agent. The bill of lading includes information on where the tractor is being shipped to, how and when it is being moved, and transport conditions.
- Packing List
- This contains invoice information and may be reviewed by a CBP officer.
- Commercial invoice
- A valid commercial invoice includes the following:
- Business address
- Shipping address
- Country of Origin
- The item’s value
- The items
- The recipient’s business or company location and name
- The company’s location and name
When your tractor arrives at the port, the customs broker has to file the entry documents at the port director’s specified location within 15 days. The needed documents are:
- Either a 3461 CBP form, 7533 CBP form, or other merchandise release form required by the port director
- Pro forma or commercial invoice
- Right to make entry evidence
- Any other paperwork required for the items’ entry
The CBP will release your heavy equipment after you have filed an entry summary and deposited the duties at the entry port until 10 days after the entry of the equipment.
You will also have to present evidence of a bond covering taxes, charges, and duties. Bonds can be acquired through a surety company and posted as either U.S. currency or obligations towards the U.S. government. Customs brokers can authorize the use of bonds to cover necessary charges.
Once you have presented the entry summary, the CBP will either examine the shipment or waive the examination and release the tractor—unless regulatory or legal violations have occurred.
Entry summary paperwork and estimated duties should be submitted within 10 days of equipment entry to the customhouse. The paperwork contains the following:
- A 7501 CBP form
- The entry package’s return to the authorized shipping agent, broker, or importer following the release approval of the item.
- Any documents or invoices that can be used to collect relevant statistics, calculate duties, and ensure all import requirements are met. ABI (automated broker interface) features may be used to reduce or eliminate needed documentation.
If you need your tractor to be released immediately after arrival, you can submit a completed 3461 CBP form for immediate delivery release before the equipment arrives.
Carriers that are Automated Manifest System participants can receive release authorizations 5 days before arriving in the U.S. or leaving the country of origin. Once the application is approved, the release of the shipment is expedited.
Your customs broker will file an electronic or paper entry summary and deposit the duties within 10 days. However, only the following merchandise qualifies for immediate delivery release:
- Items arriving from Mexico or Canada, given that the correct customs bond is used and the port director grants approval
- The shipment is organized by a United States government officer or agency
- Merchandise that uses a tariff rate quota sometimes qualifies. Absolute quota articles may be included, but formal entry is still required
- Occasionally, warehouse items that were just released
- Items authorized by CBP headquarters for immediate delivery
Customs Bond for importing tractors
If you’re importing heavy equipment into the U.S., a customs bond is essential for the process to be successful. To ensure personal flexibility and convenience, consider investing in either a single-entry bond or a continuous bond option—with the latter being more suitable if multiple shipments are expected within 12 months. In addition, purchasing a continuous bond gives you access to all ports across America throughout that year’s duration, and the cost of this customs bond may vary depending on your chosen clearing agent.
The entry process
An importer needs to take the appropriate steps when importing heavy equipment into the United States. Filing paperwork at a border entry port and obtaining approval from CBP will be necessary. At the same time, any associated duties must also be paid to complete the legal importation of such items. Additionally, contact should occur with CBP and other relevant agencies. Environmental regulations that require compliance before the successful release of goods through customs clearance processes may apply.
Despite expenses incurred, it is possible for heavy equipment to be transported from one U.S. port of entry and re-entered at another. This process can either be completed by a customs broker or consignee. All pertinent documents must first be filed with the CBP near the arrival point before transportation takes place.
Storing heavy equipment in a warehouse for up to five years is an option that may be of interest. However, it requires securing a CBP bond. Doing so allows you the potential opportunity to re-export later on without any applicable duties or taxes, and if, by chance, destructive forces were to affect your stored property while under CBP care, fiscal obligations will no longer remain due from your account. Furthermore, within this period, CBP reserves the right—but is not obligated—to clean or alter its condition through non-manufacturing processes at its discretion.
If your cargo has not been entered in the destination port within 15 days, it may be placed into a warehouse at your expense and risk. If no entry is made for six months, then legal action must be taken to either dispose of or sell the machinery through a public auction, with any proceeds used towards storage fees and duties. You can file an appeal against added costs up until 10 days after the sale. These claims should include evidence such as your original bill of lading.
Certified or photostatic copies of the bill of lading may be used if a portion of the shipment is sold. It falls to the carrier’s responsibility to alert bonded warehouses on any items that were not entered into customs. At this point, warehouse managers will arrange for secure transport back to their premises. Such transportation costs and risks are shouldered by consignees. In unfortunate instances where sale revenue does not sufficiently cover associated taxes, destruction may ensue as authorized by local laws.
Importers may choose to present certain items at a location other than the port of entry. For this process to be successful, and in an effort to protect U.S. revenue interests, such equipment is subject to bond upon transport from its original point of arrival. Carriers willing to transport bonded heavy machinery must fill out CBP Form 7512, which is the document authorizing inspection by CBP officials and any additional permits required.
Right to enter the country
Individuals and commercial carriers transporting heavy equipment into the U.S. must secure an approved customs broker to act as their agent. These customs brokers are CBP-licensed firms or individuals who provide import services, ensuring duties are paid accurately and that all necessary entries have been sent for approval by Customs. Fees may vary based on requested services from the chosen broker.
Secure entry of heavy equipment into the country requires a valid evidence form. To make this possible, an authorized power of attorney can be granted by the firm or individual who wishes to have it imported—typically, through showing employee-level authority.
Entry handled by others
Companies in and out of the U.S. can use an exporter, officer, or representative for entry processing. Should a foreign corporation need to enter merchandise, it would require a United States-based agent with appropriate authorization who is resident at the port where equipment will be entered. Nonresident entities must also secure CBP bond surety within the U.S. borders before entering any goods.
An exporter can guarantee entry into the U.S. with a power of attorney from a licensed broker. However, if an international entity or individual makes the declaration, it must be accompanied by support from a surety bond for duties to be paid and fees waived. To make these declarations legally eligible outside American borders, they need verified notary seals aiding their legitimacy (available through US embassies and consulates worldwide).
Using a power of attorney
International business entities, such as corporations and partnerships with nonresident employees or officers, can grant power of attorney to their authorized representatives within U.S. borders. The beneficiaries, in this case, must be American citizens who then handle shipments while ensuring that all transactions undertaken at customs remain inviolable. To issue a legitimate power of attorney document, CBP provides an official form that needs to be filled out accordingly. However, similar documents made individually may also suffice for validation purposes.
If you require a foreign corporation to issue a power of attorney document, necessary paperwork must be provided to yield legal validity. This documentation should include certification confirming the company’s legitimate state and copies illustrating its governing body and purpose as documented by incorporation articles or charter provisions. If there is familiarity with their incorporation status, providing this evidence may not be essential. Additionally, any rights that have not been authorized can easily be removed from documents or forms when desired.
Foreign corporations and partnerships and nonresident individuals may authorize U.S.-qualified residents to provide power of attorney on their behalf. This grants the citizens rights over the acceptance process served on the organization or individual’s behalf. Such a partnership’s power should not exceed 2 years from its execution date and must list out all members comprising it. It is important to note that any one member is authorized to handle customs business in vigilance with this grant of authority.
A membership change may bring about the need for a new power of attorney from the subsequent firm to ensure the validity of customs procedures.
Deterioration or damage
In some cases, the CBP officer may determine that your tractor has no commercial value due to deterioration or damage when entering the United States. It will thus earn non-importation status and will not be charged duty. If you are importing several tractors and some have been damaged, duty is charged only if you separate the damaged tractors from the rest under CBP supervision. Discoloration or rust on tractors made of steel or iron will not result in a duty reduction allowance.
Informed compliance is a shared responsibility between the import community and the CBP, requiring the CBP to communicate all trade requirements to businesses and people who, in turn, should respect the requirements and abide by all laws and regulations. The compliance benefits both parties and expects importers to exercise utmost care during the importation process. The CBP usually requires fewer resources on entry reviews and examinations with compliant importers, and compliant importers’ cargo is examined and reviewed less often. The CBP issues informed compliance publications and rulings on different processes and subjects to help importers learn more.
Due to the varying nature of imported items and regulations, there is no one-size-fits-all checklist. However, when it comes to transactions with customs, there are a few general things to keep in mind.
- If you are an independent commercial importer (ICI) who will not be soliciting the help of a customs broker, lawyer, customs consultant, or accountant, you will need access to all CBP regulations, CBP decisions and bulletins, and the U.S. harmonized tariff schedule. The information is readily available online and will help you identify and understand CBP regulations and laws relevant to your specific import.
- To ensure that your company is in complete compliance with the CBP, it’s important to verify all documentation prepared for submission. Otherwise, you may risk running afoul of regulations set forth by Customs. Any materials generated by an external agent should be reviewed thoroughly before transmitting them, and any discrepancies must be communicated immediately.
- If an expert is guiding you through the process, make sure to discuss the matter in advance. Give them accurate and complete information about the transaction.
- Remember that identical items may be dealt with differently at different CBP offices or ports.
- Provide CBP with an accurate, complete, and detailed description of the imported heavy equipment and the appropriate tariff classification.
- You will need a CBP ruling to acquire the equipment’s tariff classification and description.
- If the equipment’s tariff classification and description aren’t readily available, you should create a procedure to obtain that information and forward it to the CBP.
- The equipment has to be classified by the CBP.
- Review tariff schedules, CBP rulings, court cases, and compliance publications to correctly classify and describe your equipment.
- Speak to an expert to classify and describe your equipment correctly.
- Some items receive a special tariff or conditionally free provision or classification. To obtain that, ensure your equipment qualifies and acquire the correct documentation for the claim.
- Rely on dependable procedures to organize the right paperwork and all supporting information.
A shipper or shipping agent’s commercial invoice is considered valid if it was formed per CBP regulations. The Tariff Act states that the commercial invoice should include the following information:
- The entry port where the equipment will arrive at.
- If the heavy equipment will be sold, state the place, the names of the seller and buyer, and the time. If the equipment is consigned, make sure you include the names of the receiver and shipper, the origin, and the time of the shipment.
- A detailed description of the item, including the name of the equipment and its type.
- If the equipment was sold, write the price in the sale currency.
- The item’s value should be stated in the transaction currency if a shipment is transported for consignment purposes.
- The country of origin.
If the heavy equipment is sold during transport, remember to file the initial transaction invoice and the resale invoice. All documents should be written in English or include a certified English translation.
All items entering the United States are subject to duty depending on their classification in the U.S. Harmonized Tariff Schedule. For ad valorem dutiable equipment, compound or specific rates, which amount to a percentage of the equipment’s value, may be assessed.
With imported tractors, the duty can vary depending on the country of origin. Most items will be subject to the most favored nation (MFN) rates regarding liquidation and entry paperwork filing. However, trial shipments should not be used to determine proper tariff treatment in case more information is needed.
Duty cannot be paid in advance in another country before the equipment is imported into the United States. In most cases, duty payment liability is fixed following the completion of entry procedures with the CBP, and the person or company who filed the entry must pay the tax.
As an independent commercial importer, you are fully liable for the customs charges if the customs broker does not pay them. If you are paying in check, write a separate check payable only to CBP rather than paying the customs broker the entire amount.
When a customs broker submits an entry in their name, they can avoid being held liable for increased taxes if they provide the true owner’s identity and obtain certification of duty obligation. Import bondholders must ensure that documentation is sent to the port director within 90 days of the initial submission date.
For those wishing to transport heavy equipment or tractors across international borders, disassembling and transporting the items in a container may be beneficial. The CBP considers containers instruments of international traffic—meaning they are exempt from duty upon arrival regardless of whether they’re empty or full. However, users must first apply for designation to the commissioner of Customs and Border Protection before attempting any domestic use. Failure to do so will result in paying an applied duty once discovered.
Importers can benefit from liability relief through bonds if their imported items are destroyed with Customs and Border Protection oversight. Compliance within a designated timeline is necessary to take advantage of this opportunity.
Duty-free status with a formal entry can be obtained by stating in the summary that the country of origin is a beneficiary developing nation of the Generalized System of Preferences (GSP) trade program. Items will not be taxed given the following:
- The item is produced by the beneficiary country, and
- The item is entirely manufactured or produced in the beneficiary country
- The item has been substantially transformed to build the equipment, and it was brought in from another country
- The item is shipped directly from the beneficiary country to the United States
- Produced materials originating from the beneficiary country and processing amount to at least 35% of the equipment’s value
Developing countries can consider the value or cost of materials used in production when meeting the 35% Generalized System of Preferences (GSP) requirement if those materials have experienced a double transformation. The material must be substantially altered within the beneficiary nation and then again to produce equipment, with direct processing costs including labor expenses, depreciation on machinery and tools utilized, plus research & development activities such as testing for verification purposes.
Direct processing costs encompass vast resources, such as labor and machinery, essential to the production process. Equipment depreciation, testing, inspection, and research are critical elements in this cost structure. However, it is important to remember that general expenses or profits do not qualify for inclusion. Items such as insurance fees for staff members on the sales team or administrative salaries should be excluded from direct processing analysis.
Importing from China
Since some heavy equipment or specific parts may not be available in the U.S., you may find it necessary to import from other countries such as China. To do so, make sure you:
- Write down all technical specifications of the item. If the item is a factory product, include a specification list that contains the item’s details and all relevant information. The equipment’s control system, weight, protection class, efficiency percentage, motor usage, model, and function are also included.
- Meet all safety standards to guarantee a smooth import process without incurring a hefty fine. Machinery from China does not usually conform to U.S. safety standards, so refer to the ASTM to understand the standards the imported item should meet. Sometimes, you will also have to meet ANSI, RIA, ISA, NFPA, or UL standards. The equipment may even be recalled or detained by customs if it does not meet standards.
- Conduct a test and include a report that guarantees the item is safe for transport. The test can be conducted by a third party who will submit a report, including the item’s ID, the issuing company, its manufacturer, and the date the report was sent.
- Determine whether the equipment will require any spare parts and a warranty. If you need to purchase replacement parts, try to buy them from the United States since you will have to pay for transport. Purchasing from the U.S. also eliminated delays.
- Quality-check the equipment before it is transported to you. If the item arrives broken or defective in any way, you may not be able to return it easily or get a refund.
- Prepare all paperwork to pass customs. Once you’ve gone through the previous steps, all that is left is to pass U.S. customs and receive your item at the port of entry.
Import duty on heavy equipment from China
The World Trade Organization (WTO) relies on the HTS or harmonized tariff schedule to calculate import duties. Generally, this import duty tax is a percentage of your purchase’s total value and can vary from 3-25% depending on whether it was made in China. To ascertain an exact rate for an incoming shipment, you should consult with your customs broker, who will advise further based on their evaluation via the bond they have provided.
Importing from Canada
Canada and the United States have distinct geographical advantages when it comes to transporting freight. Regulations are lower than in other countries, making compliance easier if you find the equipment needed for your shipment. To ensure customs clearance of goods into either country, obtaining a PAPS number is essential since this acts as an identifier both sides use during inspections. Once approved, all necessary information will be forwarded to relevant brokers, allowing fast passage across borders with peace of mind!
Upon completion of the PAPS number, the transport company can create a shipment manifest to provide appropriate data regarding the equipment for future reference. Subsequently, U.S. customs requires several documents, such as confirmation or invoice with the truck waybill, before allowing them safe passage across borders—if no problems are encountered from either side, it should be able to move ahead without issues.
Your trucking company may need to proceed through a customs checkpoint to ensure a smooth entry into the United States upon delivery. While this quick transport setup will add an expense of $100 and temporarily slow transport speed, it is essential in certain circumstances. To avoid paying import duty on heavy equipment coming from Canada, acquiring a Certificate of Origin issued by USMCA would provide proof that should exempt you from such fees.
How GHY Can Help You Import Your Tractor
At GHY, we help hundreds of importers bring their vehicles and heavy equipment into the United States every year without any hassle. From checking your vehicle’s admissibility to preparing and filing your documentation, we’ll take the work off your shoulders. Book a meeting with one of our Trade Experts and we’ll take it from there.