In an increasingly complex global trade environment, import tariffs play a defining role in the true cost of international shipping. For Australian businesses, clarity around who pays these tariffs is key to protecting margins, maintaining competitiveness, and planning with confidence.
Tariffs, also known as import duties, are taxes imposed by a government on goods entering a country. They are commonly used to protect domestic industries, influence trade flows, and generate government revenue.
In practice, tariffs are collected by the destination country’s customs authority at the point of import. The importer is required to pay these charges before the imported goods are released for delivery, either directly or through an appointed carrier or customs broker.
Tariffs are not a flat fee. The amount payable is typically determined by several key factors:
For Australian SMEs, the key takeaway is that tariffs are not just a compliance issue. They directly affect landed costs, pricing decisions, and the customer experience — particularly when it is unclear who is responsible for paying them at import.
Once tariffs are applied, the next, and often most misunderstood question is who actually pays them.
In international shipping, tariff responsibility is not automatic. It is determined by the commercial agreement between the seller and the buyer, and formalised through Incoterms (International Commercial Terms). These globally recognised rules define who is responsible for transport, insurance, customs clearance, and the payment of duties and taxes.
For businesses, this distinction matters. Getting it wrong can lead to unexpected charges, delayed deliveries, or disputes with customers.
Incoterms clarify where cost and risk transfer from seller to buyer. While there are several Incoterms, two are especially relevant when it comes to import tariffs:
Under DDP, the seller takes responsibility for all import formalities. This includes paying applicable tariffs, duties, and taxes before the goods are delivered to the recipient.
Under the terms of DAP, the seller delivers the goods to the destination country, but the buyer is responsible for paying tariffs, duties, and taxes before delivery can be completed.
When tariff responsibility is unclear or poorly communicated, shipments are more likely to be held at customs. Buyers may refuse to pay unexpected charges, leading to delayed deliveries, returns, or additional storage fees.
Once tariff responsibility is defined through Incoterms, the next challenge for Australian businesses is managing the commercial impact of tariff changes in destination markets. In recent years, the United States has become a clear example of how quickly trade conditions can shift, and how those shifts affect Australian exporters.
From April 2025, the US introduced a 10% baseline tariff on most imported goods1, including those originating from Australia. While US importers pay these tariffs at the point of entry, the commercial impact is often felt well beyond the importer alone.
For Australian SMEs shipping to the US, these changes have reshaped pricing conversations, delivery expectations, and margin planning almost overnight.
US tariff measures have frequently been announced and implemented with short notice, leaving businesses little time to renegotiate contracts or adjust pricing strategies.
For Australian exporters, even a baseline tariff can materially increase landed costs for US buyers. In certain sectors, additional tariffs imposed under specific trade measures have pushed effective rates much higher, further straining already narrow margins.
A clear example can be seen in softwood timber, lumber, and selected wooden furniture products, which are subject to ad valorem tariffs when imported into the US2. Ad valorem tariffs are calculated as a percentage of the declared customs value of the goods, rather than as a fixed fee per unit.
This means that as product prices, freight charges, or insurance costs increase, the tariff payable rises in tandem. For Australian businesses exporting wood products or timber-based goods, these value-based tariffs can significantly amplify cost pressures, particularly where pricing has already been agreed with overseas buyers.
Tariff changes seldom operate in isolation. In markets like the United States, shifts in import duties have coincided with broader changes in global freight dynamics, adding indirect costs that can further squeeze exporters.
For example, in a report by FreightWaves, ocean carriers on key trade lanes between Asia and the US have been looking to implement higher rates while reducing the number of sailings to balance supply and demand on trans-Pacific routes3. This has resulted in fewer available vessels and upward pressure on freight levels for certain services.
For Australian SMEs exporting goods overseas, these higher or more volatile freight rates can increase overall landed costs, particularly on full-container shipments or when freight contracts roll over at higher rates. When combined with tariff obligations in the destination market, the cumulative cost effect can be significant.
Customs inspections and documentation checks triggered by tariff changes can also lead to longer clearance times, which in turn may result in:
These indirect costs often go unnoticed until they appear on an invoice, which is why proactive planning around freight strategy, customs clearance, and tariff responsibility is critical for maintaining competitiveness in export markets.
Ultimately, Australian SMEs face a difficult decision. Either absorb higher landed costs and protect customer pricing, or pass those costs on and risk reduced demand.
This challenge is magnified for e-commerce and small exporters shipping lower-value consignments. Changes to low-value import thresholds in some markets mean that goods which previously cleared duty-free are now subject to tariffs, increasing the likelihood of unexpected charges at delivery.
While tariff changes are largely outside a business’s control, exporters in Australia can take practical steps to reduce exposure, manage costs, and protect long-term competitiveness.
Start by reviewing your supply chain to identify where tariff risk sits. This includes assessing whether finished goods or components are sourced from regions subject to higher duties, even if final assembly takes place in Australia. Monitoring HS code classifications and updates through official resources such as Austrade’s Go Global Toolkit can also help businesses anticipate cost changes before shipments move.
Reducing reliance on a single sourcing country can lower tariff exposure and improve resilience. Exploring alternative suppliers in regions with more favourable trade arrangements, such as parts of Southeast Asia, may help manage landed costs. In some cases, nearshoring or limited overseas assembly closer to the end market can also reduce the cumulative impact of tariffs.
Over-dependence on any one export market increases vulnerability to policy shifts. Australian businesses may benefit from leveraging existing agreements such as the Australia–UK Free Trade Agreement4, or by expanding into Indo-Pacific markets where trade barriers are lower. Diversification can help stabilise revenue while reducing tariff-related risk.
Accurate customs classification is essential to avoid overpaying duties or triggering clearance delays. Working closely with experienced customs brokers and logistics partners helps ensure documentation is correct from the outset. Automated duty and tax calculation tools can also improve transparency and reduce surprises for both sellers and buyers.
Tariff policies can change with little notice. Keeping up to date with announcements from trade authorities, industry bodies, and logistics partners allows businesses to adjust pricing, contracts, and shipping strategies more quickly — and avoid last-minute disruptions.
The Incoterms determine payment of import tariffs agreed between the seller and the buyer before the shipment is made. These internationally recognised terms define which party is responsible for import clearance, duties, and taxes. When tariff responsibility is clearly agreed upfront, businesses can avoid unexpected charges, delivery delays, and customer disputes.
Recent tariff measures were introduced to support domestic industries, address trade imbalances, and respond to national security concerns. In the US, these objectives have resulted in a baseline import tariff and additional sector-specific measures, which now affect a broader range of imported goods than in previous years.
For Australian businesses, tariffs increase landed costs and add uncertainty to pricing and fulfilment. The removal of the de minimis exemption for low-value shipments means even smaller parcels are now subject to import tariffs. Combined with changing trade policies and freight market volatility, this has made cost planning more complex for exporters.
Some goods may qualify for exemptions or reduced tariff rates, depending on product type, origin, and applicable trade agreements. However, most Australian-originating products are subject to standard baseline tariffs unless a specific exemption applies. Accurate classification and up-to-date trade knowledge are essential to identifying any available relief.
In today’s evolving trade environment, understanding who pays import tariffs is no longer optional. For Australian businesses, clarity around tariff responsibility helps protect margins, avoid unexpected costs, and maintain strong customer relationships. With the right Incoterms, accurate customs planning, and informed logistics decisions, tariffs become a manageable part of doing business globally.
DHL Express supports Australian exporters with customs expertise, global reach, and practical tools to navigate import and export duties with confidence.
Any regulatory information contained herein is for informational purposes only and DHL assumes no responsibility for the accuracy of the information. DHL does not provide specific regulatory or legal advice to the public and you are encouraged to seek your own legal or compliance counsel.
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