Duty-free no more: Parcels worth under $800 no longer qualify for a US tariff exemption

NEW YORK AP Low-value imports lost their duty-free status in the United States on Friday as part of President Donald Trump s agenda for making the nation less dependent on foreign goods and resetting global exchange with tariffs An executive order eliminated a widely used customs exemption for international shipments worth or less as of a m Eastern Daylight Time nearly two years earlier than the deadline set in the tax cuts and spending bill approved by Congress Saying they received too little time and information to start collecting duties on small parcels the national postal services of more than countries have temporarily suspended sending a few or the bulk U S -bound packages They include the mail systems of Australia New Zealand India Japan Mexico Thailand and almost every country in Europe Purchases that previously entered the U S without needing to clear customs will require vetting and be subject to their origin country s applicable tariff rate which can range from to For the next six months mail carriers can instead apply a flat duty of to to packages sent through the global postal grid After that both mailed parcels and those handled by private courier services will be subject to the value-based tariff rate Although the president previously ended the de minimis rule for inexpensive items sent from China and Hong Kong having to pay import taxes on small parcels from everywhere else likely will be a big change for selected small businesses and online shoppers In addition to bringing new costs the withdrawal of duty-free therapy is likely to delay orders according to logistics experts Exemption created in for imports The Trump administration says the exemption has become a loophole that foreign businesses exploit to evade tariffs and criminals use to get drugs counterfeit products and other contraband into the U S Former President Joe Biden and members of Congress also discussed the issue Other countries have similar exemptions but the threshold is usually lower For example euros is the value limit in the European Union countries that use the euro as their official currency The U K allows foreign businesses to send parcels worth up to pounds without incurring tariff charges In the U S the de minimis Latin for lacking significance or importance exemption started in as a way to save the federal administration the time and expense of collecting duties on imported goods with a retail value of or less U S lawmakers eventually increased the eligibility cutoff to in to in and to in according to the Congressional Research Amenity Since then the number of shipments claiming de minimis rehabilitation has exploded A total of billion packages with a combined value of billion reached the U S last year compared to million packages sent under the exemption in the U S Customs and Territory line Protection agency released About of the shipments came from China and Hong Kong according to an analysis logistics firm Flexport prepared based on U S ruling body records Multiple countries and regions accounted for the remainder including Canada Mexico the European Union India and Vietnam Boutique owner anticipates higher costs for European apparel Proponents of limiting the exemption argue that it has served as a way for China-founded retail platforms like Temu and Shein to flood the U S with low-priced goods The National Council of Textile Organizations reported the move would help close a backdoor pipeline for cheap subsidized and often illegal toxic and unethical imports But specific smaller American companies that rely on imported products and materials benefited from the exemption too Kristin Trainor is worried the end of de minimis will also mean the end of Diesel and Lulu s her -year-old boutique in Avon Connecticut Over of the women s clothes and accessories she stocks comes from small fashion houses in France Italy and Spain Trainor places small batch orders each week that fall under the threshold Our business model is to provide casual chic and unique clothes at affordable prices she commented The added customs and duty charges that will go into effect on Aug will eliminate that affordability Trainor explained she was looking to replace her European vendors with ones based in the U S But her bestselling product categories such as apparel made of Italian linen come from other countries She estimates a simple linen sundress that cost wholesale at the beginning of the year will rise to next month After a corporate career Trainor opened the store to have more time with her -year-old son and her -year old father Raising the boutique s prices to absorb part of the import charges would help offset higher shipping and logistics costs but Trainor worries her customers will balk at higher prices I have not made any official announcements to my customers just yet although they have started to ask if I will stay open as they understand the economic impacts that are occurring she announced At this point I am leaning more and more towards closing the boutique sadly Deal agreement doesn t shield products from Mexico and Canada Ken Huening started CoverSeal his business making and selling protective covers for cars motorcycles grills and patio furniture in The company is based in Los Gatos California and the covers are manufactured in Mexico and China When a customer places an order it ships from Mexico Although a contract agreement that took effect in has made majority of goods from Mexico and Canada exempt from country-specific U S tariffs the withdrawal of the de minimis rule applies to all countries Huening announced he ll either have to raise prices or end free shipping now that his products will be taxed when they are sent from Mexico to U S customers He s looked at setting up a U S production and logistics framework but says domestic sewing facilities and textile manufacturers do not exist for the engineered fabric used in CoverSeal s products We are often appealed why we don t just establish a U S supply chain he disclosed It is not manageable in the short term By the time the infrastructure is established a multitude of companies and small businesses will be out of business Shannen Knight imports hard-to-find sports goggles and glasses as the owner of A Sight For Sport Eyes her online store and shop in West Linn Oregon She routinely received shipments from the U K the Netherlands and Italy that fell under the de minimis dollar cutoff Knight estimated that she would need to raise the retail price of the rugby goggles she gets from Italy by It took the International Rugby Board two years of testing to approve the Italian-made goggles a specialty item without strong prospects for stateside production she declared There are products that it just makes sense to be made internationally where there is the stronger demand for them but there still is particular demand for in the U S Knight stated