I live in New Zealand - until 2019 things used to work this way for us too. A law was introduced to require overseas sellers selling more than $60,000 NZD/year into New Zealand to collect pay our Goods and Services Tax.
Now Amazon/Temu/AliExpress others all collect 15% NZ GST at the checkout. It's pretty seamless as a buyer, just that GST is not usually shown until checkout unlike domestic sites.
https://www.ird.govt.nz/gst/gst-for-overseas-businesses/gst-...
This is distinct from import taxes. I used to work for a retailer that sold to the US. We collected sales tax (which is not GST/VAT, semantically different, and you have to pay a US company to calculate it for you), but still had to put a limit of $800 per package in order to not get hit by import duties.
I believe Temu/Shein/etc collect US sales tax based on the destination address, but that is insufficient.
> you have to pay a US company to calculate it for you
You don't have to pay a company to calculate it for you, but it is difficult to calculate. I think all the states with sales tax assert that the correct sales tax for a delivered item is based on the location of delivery, and determining the tax jurisdictions from the location of delivery is complex. Using the city field of the address is often wrong, because that's really just the name of the post office that serves the delivery location, not an indiciation of what city (if any) the delivery location is in.
Once you've determined the jurisdictions, you also need to confirm the rates for the shipped items and collect and remit the taxes.
It's a lot harder than schemes where there's a single rate for a country or at most one rate per top level subdivision of a country, where delivery addresses almost always have the subdivision clearly marked.
In the general case, sales tax changes at the building level. While you are not legally required to pay a company to calculate it, US sales tax is prohibitively complex to the point that paying a company to calculate it is practically required.
De Minimus rules are the reason why you don’t have declare that fridge magnet and bag of chips you bought from your trip to Beijing. Going to make air travel a mess flying into the US setting de minimus to $0 and travelers have to declare everything.
But Temu/etc aren't sending a shipping container. They're sending a tiny package addressed to an individual directly. They look a lot more like family sending a souvenir from their holiday than large scale commercial freight.
Well, possibly yes, US law is one of the most regulation heavy countries making this sort of stuff impossible.
However the point really is, do there really need to be issues at the border when flights land? I guess you could exempt travellers so that there is the appearance of normality to people IRL, but that wouldn't prevent issues at the border for packages, and most people get a lot more packages than they do fly in/out of the US, so I'd imagine it wouldn't take long for people to really notice the impact directly (let alone several steps removed as companies can no longer import effectively).
I could see a regulatory environment where if a package is personally escorted through commercial flight, it falls under a different set of rules than as a package sent from one place to another.
Or not! But I don't think the problem is that we cannot craft regulation, it's whether we ought to.
Isn't the entire point that people should order their packages from companies subject to US jurisdiction? Or at least from countries that make a good faith effort to enforce compliance with US regulations.
On the other hand, that point is not as legitimate in the US as in Europe due to domestic companies such as Amazon that don't act in good faith. Stores that pretend to be marketplaces and therefore try to avoid responsibility for the stuff they sell for their subcontractors.
It's not the laws it's the skirting around. Chinese sellers are already notorious for waaay under declaring package value so buyers aren't hit with customs charges. So many packages cheap enough to be sent without insurance but expensive enough that customs duty should be collected.
This isn’t a well thought law, but a rash executive order. I have a trip to Beijing coming up in April and I’m a bit worried about this and potential retaliation.
Bit off topic, but if you ever travel into Australia never don't declare that package of chips.
It could easily turn into your most expensive bag ever.
All food items simply _must_ be declared. There's two lines, so join the "something to declare" one. You'll be waved through after a quick inspection, or asked to surrender any offending items. Super easy. The declare line is often quicker as well.
I was witness to someone doing this into New Zealand. It clearly states all food stuff, but someone failed to declare their half of a Subway sandwich. This was a sandwich bought in the departing airport in the US, and then sat at room temp for the entire flight to NZ. Like, why do you still have it on you, and not have trashed it already? Nice little fine for essentially trash because someone wasn’t paying attention.
The USA has this also. I once declared chocolate cake that my girlfriend (now wife) baked for me on a trip to the USA from China. I didn’t even get sent off to secondary, I just told them what I had when I handed in the form and they waved me through.
I agree with your statement except that their entire business model revolves around exploiting a de minimus rule such that it isn’t beneficial to the USA. Their should be a limitation against a shipper exceeding a certain threshhold value of shipments into the USA before they need to start paying tarriffs.
I think you could adjust the rule so that it covered this situation, but didn’t cover shippers who specifically created fast shipping to avoid tarriffs and keep the processing outside the country.
That being said, I benefited from this when I ordered my Prusa 3d printer and I believe it was purposely priced exactly under the threshhold so that I would avoid the tarriff.
I’ve experienced part of this as someone that once sold imported music back in the late 90s. A competitor opened up in Hong Kong that sold at retail prices lower than our wholesale prices (we used legit importers who paid their duties and priced accordingly). I placed an order to see how it would turn out, and when I received the package, there was a note inside that stated the duties had not been paid on the order and that I was responsible for them. If customs were to inspect the package, they would hold it and release it once the duties were collected. These packages were too small and infrequent for customs to ever take notice, so the buyers were essentially getting items tax free because of course nobody self reported and paid these taxes.
This was pretty much the straw breaking the camel’s back, and our little import business shut down shortly after that as orders dropped like a rock
Do automakers use foreign trade zones? My (perhaps incorrect) understanding is that the US doesn't charge duties on goods imported into FTZs that are later re-exported. To be clear, I agree that these tariffs will disrupt the transport of car parts across the border and raise car prices...
So you're saying that in order to produce cars at a price point that will actually sell, manufacturers are going to be forced to start doing more of their production domestically?
They're more likely to shut down the plants. The cross border system has been in place for decades.
It is unclear if the tariffs are a short term or long term policy. If short term then there's no way to justify the investment.
So you have to wait until you get certainty. And then you need to build industrial plant, train workers. And crucially the new workers have to stop whatever work they were doing previously.
If tariffs are long term it seems likely more of the manufacturing process will occur in the US, so long as sufficient raw materials can be sourced inside the US.
If a foreign country has cheaper raw materials and cheaper manufacturing costs, maybe they will export manufactured parts.
Of course, in the short term this is full panic mode, with the real potential for some manufacturing to be removed in US or retooled to meet new requirements.
A US company that buys metal castings from Canada and sells finished parts back to a factory in Canada might decide to look for a new source, but it's not a given that they will find one, or that switching would make more sense than losing business to higher prices.
As a buyer of low volume metal castings from both domestic and foreign foundries that my company finishes and sells to the energy industry in the US, our customers often tout that they’ll pay any mark-up for a domestic casting. We then have to explain to them that regardless of their willingness to pay up, there are literally no domestic companies that are willing to produce this stuff, let alone at a reasonable price.
To give more detail, one casting is a low precision structural attachment that connects an heavy anchor chain to a floating buoy. This part is cast from 316 grade stainless steel in China for ~$50/ea. For GSA work in the US, we have to use the same part cast domestically from A897 Ductile Iron (a far inferior material in a marine environment) because none of the few remaining US foundries who do stainless are willing to take on the work.
Unless the government is going to take the tariff revenue, and immediately incentivize more domestic competition and investment in manufacturing infrastructure (dirty industries frowned upon by VC tech bros who have no idea where any of the physical items they rely on to survive come from) at a level greater than FDR’s New Deal, then the result is simply going to be extreme inflation and massive scarcity.
I’d love to just start a foundry making our stainless castings right here in the USA, but anyone with the time for that doesn’t have access to the funding and anyone with the funding doesn’t have the time for the lengthy payback period of building a factory. Industrial prowess in a America is basically far too gone to catch up at this point and even the high value and cutting-edge R&D stuff will fall off as we don’t have all of the legacy “heavy industrial” know how that unlocks the latter part of the value chain.
> dirty industries frowned upon by VC tech bros who have no idea where any of the physical items they rely on to survive come from)
Everyone knows where it comes from, it just doesn’t make business sense to plow money into high liability, low economies of scale businesses when your competition has far lower labor and environmental compliance costs.
Canada buys more cars made in the US than actual cars are made in canada
Lets say canada make 1 million car a year, that’s still less than what Canadians are buying.
Some Americans seems to think that all that matter is domestic production when they forget that their own companies need to export as well. Canadians do buy cars as well. This isn’t a case where all domestic production was lost from the US.
They always had that option but somehow it was cheaper to ship there and back than to manufacture in US.
So either you get 2x the tariff increase in price or you manufacture locally for something that increases the price by more than 2x shipping.
Oh no, indeed.
It’s not that it’s cheaper overseas, rather it’s often not available domestically at any price. People don’t realize just how absolutely gutted America’s commodity/heavy industrial production capacity really is and the whole system makes it nearly impossible to rebuild.
A "loophole" that is very cut-and-dried piece of law. If you want companies to pay tax on products, don't set the minimum value threshold to $800. We used to have it at about 45€, then at 22€ and now at 0€. If I need to buy a 5€ adapter from Aliexpress, I pay VAT on it.
That works great until you end up paying more in processing fees than the value of the item.
Or when you pre-pay the tax online when buying an item, the shipper doesn't mark the package correctly and the local post service tells you you have to pay the tax a second time and ask the seller for a refund of the prepaid tax. Of course that involves a long time spent chatting with a CS rep who doesn't seem to understand the problem, and they refuse to refund you for the extra processing fee. (Looking at AliExpress here. Still, don't have much of a choice.)
Or a friend decides to be nice and send you a gift for Christmas but you end up having to pay more in taxes and tax processing fees than the actual value of the gift.
Oh and did I mention the tax here in Norway is 25% of the item value _plus_ the shipping cost?
That is mainly because Norway wants to be special. I have non of these issues but then again my country is part of the one stop shop scheme due to being in the EU.
I already do tho lmao, anything that comes from the US or is shipped with UPS even outside the US is just ridiculous.
6£ ultra pro card deck box from their European website...they try to force people to use UPS shipping for that at 90£ shipping, Belgium warehouse to UK. Ended up not buying because that's just plain ridiculous.
A lot of loopholes are like that. They are clearly legal things that you can do added there for a reason a certain expectation of it to not be abused for different people purposes. They are of course used for different purposes once the landscape changes to allow so.
My favorite legal loophole was in the Ukrainian citizenship law: to naturalize, one has to renounce their previous citizenship(s), but sometimes it's not practically possible to do. When the law was passed, one of legitimate reasons to not follow through with renouncing previous citizenships was "it costs more than X percent of a minimal monthly salary". At some point 30 years later it turns out that, despite X being changed a few times, most the countries that people have to renouncing citizenships of, are falling under this "too expensive" loophole, since minimal monthly salary is a bit of an arbitrary number that a lot of laws refer to and it made sense to have it suppressed. So after kicking the can down the road a few times, the loophole was removed.
> A lot of loopholes are like that. They are clearly legal things that you can do added there for a reason a certain expectation of it to not be abused for different people purposes. They are of course used for different purposes once the landscape changes to allow so.
In this case, the threshold has been updated repeatedly while the use was the same as today. It's not a loophole.
interestingly germany came to the opposite conclusion. many people came from countries that did not allow the renouncement of their citizenship at all. i don't know how big of a factor it was but a year ago the law changed and now germany allows dual citizenship.
Was it? It was a big(in certain circles) discussion point around Brexit, because Germany does allow dual citizenship but only for citizens of other EU countries. Since UK was about to stop being an EU country, there was a question whether dual British-German citizens would have to renounce one of their citizenships. I'm glad they changed it then.
strange. to my understanding renouncing your old citizenship was only ever required when you apply for a new citizenship. once you have acquired the new one while keeping the old one you would not even come into a situation where you would be forced to renounce the old one because no one from those two countries would ever ask you.
other countries might in their visa applications, but they won't challenge your dual citizenship either. the only exception is if you got both as a child, then when you turn 18 you may still have to choose.
yes, but for that there is (I guess) the standard principle -- it's outside of the control of the person being naturalized, so they have a free pass as long as they pinky-promise to not use the other passport for convenience. Same goes for refugees -- it doesn't make sense to ask a persecuted person to fill all the necessary paperwork with the place that persecuted them. That is standard, but Ukraine also had the procedure cost in that list of exception for political reasons.
Nowdays, after the loophole is repealed, the muchhonoured-clearexcelency-mister-chief-of-the-military pushes for some version of dual citizenship where citizens of nice countries can sign a pledge instead of allegiance instead.
Not sure why you're downvoted. It's explicitly a part of American law. It wasn't an accident. It might not be in the US's best interest now (not saying one way or the other) but it's definitely by design! And not in a bad way either; this lowers costs for US consumers.
Yes, this has historically been a nice aspect of living in the U.S. compared to Europe, for those of us who like obscure stuff. Want to order some book only available from an eBay seller in another country? If you're shipping to the U.S., it's easy. If you're shipping to Germany, it's going to get held up in a customs warehouse somewhere. Seems we're going to start getting more of the European experience now.
We had that but online retailers can opt to join a one stop shop scheme and eBay does this via its global shipping program. Which eliminated the vat customs problems but people of course complained since now they never get lucky anymore by dodging taxes
The intention was presumably for people sending one-off things or bringing things with them. The loophole is companies shipping 1000 small packages under the limit instead of one big package over the limit.
No, these are paid by consumers at import time. It's not just a pass-through cost; consumers pay CBP. (I've imported many purchases, both below and above de minimis thresholds. Even the negotiation of which HTS schedule applies to specific items is between CBP and the individual -- the selling company isn't involved at all.)
That ended yesterday. Trump's new tariffs apply all the way down to $0.
Not clear what happens now that Customs and Border Protection has to look at all those little boxes.
This isn't unexpected, though. There was a notice of proposed rule making back in September 2024, and it was probably going to happen this year, anyway.[1]
This is going to complicate the "dropshipping" business. The dropshipper is usually the importer, and they now have to pay customs duties. But they're not the seller of record (the one Amazon says is the seller), who collects from the customer. Amazon likes to consider the customer to be the importer, but that may not fly. Amazon sellers are going to have to deal with the wonderful world of customs brokers, bonded warehouses, and e-filing customs paper work.
Dropshippers who order in bulk and then ship out individual packages now either have to pay duties when they get the bulk shipment, or use a bonded warehouse (inspected by CBP) to store stuff on which duty has not yet been paid. DHL has a bonded warehouse service.
> Not clear what happens now that Customs and Border Protection has to look at all those little boxes
Push compliance on to the logistics providers, is my guess. Australia removed the low value VAT/GST exemption a few years ago. Anything parcel shaped coming in needs an appropriate customs form, declared values, and VAT remitted. If the overseas seller/sender hasnt already paid VAT then DHL/auspost/etc will hold it at the port until the recipient completes and remits GST. End user never deals with customs directly, its all handled by the importer before going to last mile delivery.
Same experience sending/receiving in to the nordic countries. Though in that case nordpost entirely sucks, so any real-but-abnormal import is a HUGE pain dealing with them.
Then they just lie on the customs sheet lmao. They did it from China when I lived in NZ and they do it from China now I live in UK. None of the things I get from aliexpress etc are valuable enough to be insured so it's never been an issue per se, but it really is an issue.
I don't agree with these new thoughtless tariffs at all, but I do agree that some countries skirt the rules and certainly some more than others. Just ironic that country only got slammed with 10% when they're the worst offender.
Presuming they also combine this with foreign post abuse too? ie where one country's post office takes the mail at a knock down discount and then rely on the deal that post offices take on foreign sourced mail delivery for free, meaning the sender gets a massive discount vs sending if it were charged at anything remotely sustainable.
The current system is wildly unfair and harmful to American manufacturers, and it's especially unfair to American brands that manufacture abroad but bring their goods to the U.S. in bulk.
what gets me about this sort of thing
is that we don't wind up getting to the bottom of it.
the current deminimus violates the intent -
we need to not just restore it to something reasonable,
like $10, but also find out what in the process went wrong,
find out whose palm was greased.
$10 sounds too low? consider that with today's IT,
import processing fees should be much lower than that.
the idea of deminimus is a fine one,
just that these numbers don't make sense,
and cause a lot of damage.
Yeah, they use the same scam in Europe as well. There was a documentary following some customs officials a few months back, apparently they even use "smurfing" - they split large orders into multiple parcels with nominated "lower" values [1]... but of course sometimes the customs officials note "hey, I saw that recipient just a few packages ago".
It's high time that we put the hammer down on Temu, Shein et al., and that hard. China and its companies routinely abuse relaxed rules meant for "developing" countries such as reduced, subsidised shipping or the mentioned tax simplifications - that status absolutely has to end rather sooner than later.
And if they do not want to do that for whatever (corrupt?) reasons, at the very least mandate live feeds for all incoming parcels to customs.
> It's high time that we put the hammer down on Temu, Shein et al., and that hard.
Why? Their business model is perfectly legal, and in fact, as the article makes clear, it's not even a "loophole" -- what they're taking advantage of is an explicit provision of law. On the other side of the equation, US consumers benefit from lower prices, and often superior quality, relative to what they'd otherwise get on Amazon and Wal-Mart.
Besides, Amazon and Wal-Mart are often (in some retail categories even usually) middlemen for Chinese manufacturers. Shein, Temu, et al. are demonstrably superior middlemen.
Were making it cheaper to import product from across the globe than to manufacture and ship across town.
Its in most countries interest to build things locally if they can. A policy which penalizes a local business in favor of a foreign one is pathological.
We already ship food stuffs from the USA to China where it is processed and it gets sent back to the USA, because the cost to do this shipping back and forth and labor is so low it undercuts any North American processor. This is what free trade and low cost of bunker fuel, zero consequences for heavy pollution for container ships have wrought.
I often see the same or similar item on aliexpress for about 2-3 eurobucks, while the local shop will happily sell it to me for 20. It isn't even 2 bucks for chinese product versus the one manufactured locally, it's literally the same thing.
> It isn't even 2 bucks for chinese product versus the one manufactured locally, it's literally the same thing.
Well, at least if the thing is broken during 2 years post purchase, I can send it back to the seller and either get a repair or my money back, I don't have to pick up the parcel from customs in person (this one is a common annoyance for Germans, made more difficult by the ridiculous opening hours and the Zollämter only being present in the major cities), shipment is faster than 4 weeks aka "economy" and if it burns down my house I can at least drag some poor sod in front of a court and hope they got a corporate liability insurance.
All of that costs money, hence the thing being re-sold for what appears to be a ridiculous markup.
> Well, at least if the thing is broken during 2 years post purchase, I can send it back to the seller and either get a repair or my money back
> if it burns down my house I can at least drag some poor sod in front of a court and hope they got a corporate liability insurance.
Valid but I doubt a more thorough warranty is worth more than 5-20%.
> I don't have to pick up the parcel from customs in person
Does that actually make the shipping from china cheaper, though? Probably not. Paying to avoid an artificial barrier is a pretty bad justification for price.
> shipment is faster than 4 weeks aka "economy"
If that's a big factor, wouldn't I be able to get similar super cheap prices with slow shipping from an in-country warehouse? Because I don't see that, I see prices that are similar to going to the store.
I agree with the "build things locally" thing, but that only works for products that are popular enough in an area/country to justify production, and, through economy of scale, allow for a low enough price to be competitive.
Meanwhile those who need some niche items, for example people with a niche hobby, end up having to pay more for the same things, because they simply have no other choice. Or if they're lucky they can pay several times the price to a local (usually online) store, getting the same product, probably from the exact same factory line, just for several times the price, because now there's an extra middleman.
I suspect the causation is point the other wat -- people who don't have a path forward in life (which includes unemployed and otherwise destitute) start doing drugs.
But it also employs nobody. If everyone's jobless what's the point? Is the end goal really manufacturing everything offshore and employing nobody? How the heck is that sustainable? What would such an economy even look like?
Imagine you're making a product that is produced in America (or you import it wholesale from China) and conforms to American standards for product safety - fire resistance, toxic chemicals, electrical safety, IT security, EM emissions.
Now, some Chinese cloners come, clone your product but shart on all the regulations, cut corners everywhere and sell it for half the price or less on Temu. You're out of business, your employees are out of jobs, the US taxman is out of all of your tax revenue, and to top it off people complain about "your" product being faulty/incompliant/dangerous because they got shipped illegitimate clones. In the worst case people actually die in their sleep because the shoddy li-ion battery cell erupts in flames.
Everyone suffers from this form of unfair competition.
> Besides, Amazon and Wal-Mart are often (in some retail categories even usually) middlemen for Chinese manufacturers.
Indeed, but at least Wal-Mart makes rigorous QA for everything they sell in a store (they're known to be especially cut-throat). And Amazon at least gives you your money back no questions asked.
This whole scenario assumes that the majority of people are just plain dumb, and if that's the case then we are screwed as a society no matter what regulations and tariffs you put in place
> This whole scenario assumes that the majority of people are just plain dumb
No, but price-driven. That's the point. Temu, Shein and whatnot other "fast fashion" is successful because they are so much cheaper than the competition (who has to pay for shipping, customs, ...), and an ever larger part of Western populations has to struggle financially every single paycheck. Replacing domestic or even mid-quality Chinese clothes with Shein is just like the Boots theory [1].
The problem is, once too much of the lower income bracket falls away on the demand side, anything of higher quality on the producer side doesn't have enough of a market to sustain itself.
I so want to give you credit for referencing Sam Vines, but in all seriousness, people are going to notice that Temu isn't actually cheaper than Amazon or even Walmar, and that the quality sucks, and your doomesday scenario isn't going to play out. We definitely don't need Trump's tariffs to solve the percieved problem
Also, Shein is notorious for their sweatshops, forced labor and all sorts of highly unethical business practices. A terrible company that should be destroyed, especially since part of their business model is targeting pre-teen girls with highly manipulative and exploitive content.
The nature of parcel shipping and ecommerce has changed. Years ago it wasn’t economically practical to order things directly from China and ship them to the U.S. Instead you’d fill up a container and send it to a U.S. distributor, and pay the tariff. The de mininimis exemption was to avoid hassle and overhead for small value transactions.
Currently though temu and schein have a big advantage over Amazon and U.S. retailers because they completely avoid tariffs by shipping direct from China.
The harm is to every other vendor who actually pays their taxes, and every resident of the country who now gets lower services for the taxes they pay, because those scammers are cheating at scale.
