SEATTLE — A tax exemption on low-cost shipments from other countries is set to end on Friday, and it’s likely to make your orders and purchases more expensive.
The Trump administration signed an executive order last month that eliminates the “de minimis” rule.
This rule allowed shipments valued at $800 or less to come into the country duty-free.
The order closed the exemption nearly two years earlier than the deadline set by Congress.
The Trump administration had previously ended the rule for shipments from China and Hong Kong. Now, it will end for all other countries too.
The administration says the exemption has served as a loophole for criminals shipping drugs and counterfeit products into the country, and for businesses to exploit to avoid tariffs.
Orders will be subject to their country of origin’s applicable tariff rate, somewhere between 10 to 50%.
For the next six months, carriers can choose to impose a flat duty of $80 to $200 per package instead.
While many low-cost items come from China and Hong Kong, and consumers have likely already felt the sting from that action, this update is likely to have an impact on costs for consumers and small businesses.
Peggy Poage, who co-owns accessories store Fini in Downtown Seattle, sources products for her business all over the world.
“These bags come from France,” she told KIRO 7 while touring a crew around her store. “Super unique things.”
She anticipates a significant impact from the change — though it’s hard to say what that will look like just yet.
“It will be interesting to see, if we reorder, what the price is going to be on them,” she said.
Tariff rate changes have already affected her boutique.
“We got 40 of these in a couple weeks ago,” she said, pointing to a bag charm. “And we’re oh so surprised to find $150 tariff on top.”
Poage said it would be impossible to replace all the items in her store with products that are entirely made in the U.S.
“We live in a global economy now,” she said. “Even things that are made domestically, even things that are made in Seattle, very likely there are going to be components that are not from Seattle.”
It’s likely some of those costs will be passed down to consumers, she says, as businesses close in on a threshold at which they are unable to absorb them.
“We’re going to pay more, but we also have to pay for an enforcement,” said Jeff Gramlich, Director of Hoops Institute of Taxation Policy and Research at Washington State University. “We have to pay people to open these packages and to look at them.”
Gramlich said that could also increase the time it takes for our goods to get here.
“It’s just going to take longer to get our stuff,” he said. “Those are all costs that we end up paying.”
Several business owners said their biggest concern was the added confusion about what orders could look like once the exemption ends.
“It will be interesting to see if we reorder, what the price is going to be on them,” Poage said.
Several international postal carriers have expressed concerns too.
Some have suspended U.S. shipments in response to the order, citing confusion about how it will play out.
To avoid a surprise tax bill, be mindful of where the order you’re placing is coming from (and how that country’s applicable tariff rate is). Make sure you also know who is covering the delivery duty, whether it’s you or the company you’re ordering from.
You may also want to check the shipping location of the company.
Some international companies may have shipping warehouses in the United States.
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