Introduction to De Minimis Exemption
Your next Amazon splurge, Etsy and eBay find or haul from online clothing retailer ASOS might come with an unwelcome surprise: a hefty customs bill.
The era of shopping the world without paying customs duties on the 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.
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.
The Impact on Consumers
“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.”
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.
Another woman said on TikTok that her clothing order from Australian fashion brand DISSH was followed by an email from DHL stating she owed $1,700 for tariffs — triple the cost of the clothing.
“I feel like it was cheaper for me to buy a ticket to go to Australia to go to a DISSH brick-and-mortar and pick up my clothes than order it online," Brylin Maclin said in her post.
And in one case, a reporter for NBC Bay Area said UPS withheld his package and requested payment to cover the tariffs in order to release his order. Jonathan Bloom detailed his tariff ordeal in an Instagram post, saying he ordered a tripod part from a company in the UK and received a UPS invoice instead. Bloom said he tracked down his delivery driver, who said he could only release the package once the tariff is paid — and he could only accept a check. Bloom contacted UPS, and the customer service representative said that his order confirmation email included a note about the tariffs due, which would allow him to pay online ahead of the delivery and avoid delivery delays.
UPS, FedEx and DHL did not respond to NBC’s requests for comment.
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.
Key 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.
And while it seems simple, it’s not always easy to find the country of origin for items sold online. You can check the product description for "made" or "manufactured," and if it’s not there, contact the company’s customer support via email or chat. It’s always good to save the email or screenshot of the chat in case you receive incorrect information and need to dispute any charges or fees.
Once you find the country of origin, look up the U.S. tariff rate for that country’s goods to estimate what the import costs will be, or check if the seller lists tariff duties at checkout.
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.
At checkout or in the item description, look for the terms “delivered duty paid” or “delivered duty unpaid.” The former means the vendor plans to pay the import tax and handle any related paperwork, though some may increase customer prices to recover the costs. If a website says the duty is unpaid, also known as “delivered at place,” paying it will fall to the buyer.
Shipping companies like FedEx, UPS and DHL often add their own charges for paying tariffs and handling paperwork. These fees start at $30 or more and can quickly cost more than what you paid for the item.
UPS and DHL state on their website that they will notify customers about any duties owed before or during delivery, so pay extra attention to that confirmation email from the carrier for information on possible duties. If you owe any customs fees, there’s usually a link provided to "pay here" online and avoid having your package withheld.
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.
Countries across the world have imposed tariffs against the United States in response to the Trump administration’s sweeping tariffs against foreign imports. Here’s what you need to know.
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 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.
Mae Anderson of The Associated Press contributed to this report.
Conclusion
The end of the de minimis exemption will likely have a significant impact on consumers who shop online from international retailers. To avoid surprise customs bills, it’s essential to understand the key factors to consider when shopping online, including the country of origin, delivery duty, and how the order is being handled. By being aware of these factors and taking steps to mitigate the risks, consumers can minimize the impact of the exemption’s end and continue to enjoy shopping online from around the world.
FAQs
- What is the de minimis exemption?
The de minimis exemption is a tariff exemption that allows imports worth $800 or less to enter the country tax-free. - When does the de minimis exemption end?
The de minimis exemption ends on Friday, August 29, for all countries. - How will the end of the de minimis exemption affect consumers?
The end of the de minimis exemption will likely result in consumers receiving surprise customs bills for online purchases from international retailers. - How can consumers avoid surprise customs bills?
Consumers can avoid surprise customs bills by understanding the key factors to consider when shopping online, including the country of origin, delivery duty, and how the order is being handled. - What happens if I return an item that incurred customs duties?
Duties and taxes are still owed for entering the U.S., even if the item is returned.
