Advice on US Customs for Returning Residents

Posted by Foie Gras on April 29, 1998 at 08:06:43:


I post this in the hope that you can learn from my experience, since it may save you a significant amount of money. In summary, beware of being overcharged by US Customs on re-entering the US after making an expensive watch purchase overseas.

Presently, there are significant savings which can be made, in some cases, when an expensive watch is purchased overseas. This motivated me (and I’m sure has motivated others) to buy watches during trips outside the USA. I have just returned yesterday from such a trip, and brought back with me two Stainless Steel watches costing in total $7200.

Prior to leaving our shores I had some time on my hands at the airport and visited our friendly US Customs agents in Portland Oregon to register the watch I was wearing on the trip to avoid having to pay duty on it when I returned. Since the agents weren’t busy (during a lull in arrivals) I discussed the issue of watch duties with them. Surprisingly, these agents were quite knowledgeable on the subject, and opened the customs manual to the relevant pages to discuss the rules with me.

The following pertains specifically to mechanical watches of 17 or more jewels, whether self-winding or not. In summary, the first $400 (of total dutiable items) is passed free, the next $1000 is assessed a flat rate of 10%, and THEN THE FUN BEGINS!!

For a watch made of “base metal,” which would include Stainless Steel and titanium, among others, 60% of the value is assigned to the movement, which has a trivial duty of approximately $2.00, 30% to the case (which is dutied at about 5%, and 10% is assigned to the band or bracelet, which is taxed at about 11%. Therefore, the first $1400 will be
assessed a rate of about 7%, (0% on $400, and 10% on the next $1000). The amount in excess of $1400 will be
assessed a rate of about 2.5 — 3%.

For a watch made of “precious metals,” such as gold, platinum, etc., the treatment of the first $1400 is the same as above, e.g. about 7%. Additional value is assessed at about 5% for the case which is assigned 90% of the value, and the movement gets a trivial charge for 10% of the value, or a net total of about 5% for such a watch in excess of $1400.

Please note that the initial $1400 is on the total, so if you bought several watches, you would go into the lower rates immediately on the 2nd, 3rd, etc. watches.

In any event, prior to returning to our shores, I calculated the duty owed on my purchase as approximately $250. Imagine my surprise when the first US Customs agent I encountered (in Chicago) told me I would owe 5.9% on my watches, which would have been a substantial overcharge!! I politely informed him that I thought this was too high, and he then turned me over to his supervisor who was similarly uninformed about the correct charges!! The supervisor then told me that when they add up the various duties, it is usually more than 5.9%, so they just use this number to save us
travelers some money. I stood my ground, for 30 minutes, while the supervisor went through page after page of customs regulations!! In exchange for my interest, agent #1 proceeded to go through my bags with a fine tooth comb, even going through my dirty laundry!!!! Fortunately, I had declared EVERYTHING being brought in, so there was nothing for him to find (sorry guy, I know you gave it your best shot!!)

Ultimately, the supervisor found the correct pages in her manual, and I was charged $260, almost two hundred dollars less than the initial quote. As you can see, I paid a CORRECT TOTAL duty of about 3.6%, including the impact of the 7% rate on the first $1400.

The point of this post is to warn you that individual US Customs agents, in fact multiple ones at any one station, can be woefully
under informed about the correct duties owed on watches brought into the USA from offshore. The duties actually owed are low enough that you would have to be a fool to try to evade them by smuggling in your new watch(es). But, in order to be charged the correct duty, you must estimate what you owe beforehand, and stand your ground if given an excessive quote by your friendly US Customs agent upon your return. To estimate what you owe, subtract $1400 from your total watch purchases, multiply the remainder by 3% for a non-precious metals watch, or 5% for a precious metals watch. Then add $100. This should be close. But don’t quibble over $25 or less — the aggravation isn’t worth it.

Hope this helps.