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Should Tariffs Be Included in Cogs?

Maya Lin-Takahashi • • 7 min read
Should Tariffs Be Included in Cogs?

Inventory and cost of goods sold
The cost of the tariff is reflected in the inventory value and cost of goods sold of the importer, as a necessary expense to directly or indirectly bring the item to its existing condition and location.

Are tariffs considered COGS?

The tariff rate varies depending on the product classification, which is pursuant to the Harmonized Tariff Schedule of the United States and by its country of origin. Companies typically account for the cost of the tariff as part of the imported product's cost in cost of goods sold (“COGS”).

Are tariffs included in the cost of inventory?

When accounting for tariffs, the initial answer seems simple. The cost of inventory should include all direct and indirect costs incurred to prepare the item for sale. This would include the purchase price, plus any overhead, freight and taxes — including tariffs.

Maya Lin-Takahashi
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Maya Lin-Takahashi

Maya is a hardware enthusiast who tests and reviews smart home devices, smartphones, wearables, and audio gear. She focuses on practical consumer value and build quality.