Industrial News

U.S. Ends 90-Year “De Minimis” Tax Exemption

Posted on by Evonsa
10
Sep

The United States is ending a nearly 90-year-old policy that allowed goods valued under $800 to enter the country duty-free. Starting on the 29th, these small shipments will face high tariffs. This change creates a massive survival challenge for small businesses and international postal services.

Key Policy Changes

  • The End of Free Entry: Previously, items under $800 didn’t require formal customs entries or taxes. Now, products from Mexico, Canada, Europe, and the rest of the world will join China in losing this exemption.
  • Massive Volume: Over 1.36 billion such packages entered the U.S. last year (about 4 million per day).
  • New Costs: New regulations may impose flat fees based on the product type:
    • $80 for low-tariff goods.
    • $160 for medium-tariff goods.
    • $200 for high-tariff goods.

Impact on Businesses

Many international brands are reacting to the news:

  • Abbott Atelier (Canada): Temporarily suspending U.S. sales to find a solution.
  • Shed Maid (UK): Paused U.S. orders (which make up 50% of their business).
  • Olive Young (Korea): Applying a flat 15% tax to all orders.
  • Wool Warehouse (UK): Estimated costs could rise by 50%, leading them to pause shipments.

Why It’s Complicated

  1. Paperwork: Every package now requires a detailed customs declaration (content, value, country of origin, and sometimes even specific parts).
  2. Logistics: Many national postal services have suspended U.S. delivery because it is unclear who collects the tax or how to process the payments.
  3. Small Business Crisis: Small sellers may lose over half their income overnight. Their only options are to find U.S.-based warehouses or expand to other countries—both of which are very expensive.

Impact on Consumers

Economists warn that low-income Americans will be hit hardest. They rely on cheap imported goods that will now see immediate price hikes or supply shortages. While some officials view this as a minor change, for many families, the loss of tax-free shopping means they may no longer be able to afford basic items.

***Photo Reference:https://www.facebook.com/groups/208280356188217/posts/2564339347248961/***