Introduction to De Minimis Exemption
The era of shopping the world without paying customs duties on international packages is about to end for U.S. customers. On Friday, the United States plans to eliminate a tariff exemption that allowed imports worth $800 or less to enter the country tax-free. The so-called “de minimis” exemption, which ended on May 2 for packages from China and Hong Kong, will now be suspended for all countries beginning on Aug. 29.
Understanding the Impact
That means shipments will incur charges that range from 10% to 50% of their declared value or, for the next six months, a flat duty of $80 to $200 per parcel. “Consumers are going to be shocked,” Alison Layfield, vice president of product development at international shipping and logistics provider ePost Global told The Associated Press. “They are going to end up, I think, (with) sticker shock, or somewhere along the way, they’re going to see that extra cost.”
Real-Life Examples
Some shoppers, however, are already familiar with the fees. After President Donald Trump closed the loophole on small-value items from China earlier this year, shoppers in the U.S. reported getting bills from carriers like FedEx, UPS and DHL, for duties the shippers paid to clear online purchases through customs. Amanda Ivanelli, a lifestyle influencer, went viral on social media in May after posting a video about getting a $1,243 invoice from FedEx after ordering a haul of dresses from ASOS. Ivanelli said in her post that not only did the tariffs cost more than her entire purchase, but she had returned most of the dresses.
Preparing for the Change
Most of those after-purchase bills arose from the Trump administration’s rapidly changing trade policies, which made it difficult for businesses, especially smaller ones, to deal with the new import process. With tariffs now the norm, experts say it’s less likely that U.S. customers will continue to receive such bills because retailers are better prepared to increase costs, raise shipping fees, or add a tariff line during checkout.
Factors to Consider When Shopping Online
Here are some factors to keep in mind when shopping online to avoid a surprise customs bill.
Where is the Product Made and Where Does it Ship From?
Once a package arrives in the U.S., the first stop is a customs clearinghouse. There, a border agent reviews the digitized Harmonized System (HS) code on the customs declaration. The code is a numerical method used worldwide to classify traded products and determine duty rates. If you buy something from a seller in the U.K., for example, but the product was made in China, you’ll have to pay the tariff rate for China. That’s because the tariffs are based on country of origin, not the country it ships from.
Who Covers the Delivery Duty?
Shoppers may or may not have to pay the charges to get their orders through customs and released for delivery once they are in the U.S. Some retailers now calculate and collect estimated tariffs during checkout. If you don’t see any duties, tariffs or related fees during checkout, expect to be on the hook to pay them upon delivery.
How is the Order Getting Handled?
Another way to avoid import taxes is to check if the company you’re buying from is fulfilling the order from a U.S. warehouse. Check for a “ships from” note in the product details to see where an order will be packaged and dispatched. EBay users, for example, can filter their searches for only products that ship from the U.S. Brands with overseas headquarters should make it clear if ordered items will be prepared and shipped from within the U.S.
What Happens if I Return the Item?
If you don’t like the product and decide to issue a return, duties and taxes are still owed for entering the U.S.
What to Do with Surprise Import Charges
The last thing sellers and shippers want is angry customers, so they have an incentive to make any costs connected to the end of the exemption as clear as possible. Unfortunately, there’s not much consumers can do once they receive an unexpected customs bill. If you don’t think the duty owed is correct, you can dispute it. You also can refuse to take delivery, but you might not get a refund.
Conclusion
The end of the de minimis exemption will significantly impact online shopping for U.S. consumers. Understanding the factors that affect customs duties and being aware of the potential costs can help shoppers make informed decisions and avoid surprise bills.
FAQs
- Q: What is the de minimis exemption?
A: The de minimis exemption is a tariff exemption that allowed imports worth $800 or less to enter the U.S. tax-free. - Q: When does the de minimis exemption end?
A: The exemption ends on August 29 for all countries. - Q: How will the end of the exemption affect online shopping?
A: Shipments will incur charges ranging from 10% to 50% of their declared value or a flat duty of $80 to $200 per parcel. - Q: Can I dispute a customs bill if I think it’s incorrect?
A: Yes, you can dispute a customs bill if you think it’s incorrect. - Q: What happens if I return an item that incurred customs duties?
A: Duties and taxes are still owed for entering the U.S., even if you return the item.
