Now American customers have to pay customs and tasks on all orders from abroad, including those below $ 800, because the minimis exception is removed. A major change for many American citizens who were used to the favorable rules, and also for many shoe companies in Europe and Asia who sell a lot to America. However, the termination of the minimis is actually very logical. But it is confused by other things.
Background with new rates and the minimis removed
It is turbulent times for global trade in general and for customers in the US in particular. This spring, the Trump administration introduced new rates on more or less all imported goods, from 10% to 100% plus, depending on which origin and product type. These were then postponed a few times and in many cases they are slightly reduced from the first figures, but from August all input will now be imposed with rates (This page is good to keep track of the tariff situationBoth that are present and they are threatened).
Moreover, we have the changes to the Minimis rule. The previous one the minimis tax exception was implemented in 2016 by the Administration of Barack Obama and meant that all import for private consumers with a value of less than $ 800 would not have added tax or rights. This was removed for China and Hong Kong in the spring, and now it is completely removed from August 29. So all the entry for ordinary people who have been purchased in an online store in Europe or China, for example, have added potential loads, rights and rates.
What was the problem with the minimis?
Now I am fully aware that it was great for us to be able to buy things from abroad and did not have any costs added if the order was lower than $ 800. Especially if they ordered from Europe or other places where they can first have the high VAT (tax with added value, which is paid between 18-27% in EU countries), because VAT only by households. Of course, many companies have benefited from this, not the least in Europe or Asia, who have had large exports to customers in the US.
Given this favorable situation for import for private consumers, this meant a more difficult situation for American retailers and brands to sell in their own country, who had to pay tasks on things they imported, while private individuals did not. That was one of the most important problems with the minimis.
The larger thing was that it created a twisted competition, because the exception of the High the Minimis tax was more or less unique. 800 USD was the highest level in the world, followed by Australia with 650 USD (1,000 AUD) and El Salvador with a minimum level of 300 USD.
An example of how unfair the old De Miminis rule could hit
In recent years, when I have compared what it is like for an American customer to order European shoes from an E trade shop here in Sweden, to how it has been for me to live in Sweden to import an American shoe from America to here, the difference is crazy.
If we take shoes that cost 500 USD in our own country on both markets as an example. When Americans bought a pair of shoes from Sweden, they first pull off the Swedish barrel (which is high, 25%, which means that deduction was 20%), and then they didn’t have to pay anything when it arrived in the country. The shoes cost a total of 400 USD (500-100).
For me, if I were to buy a pair of $ 500 from the US, nothing is deducted from the purchase, and when I am imported into Sweden, I would have to pay 25% VAT, plus tasks that are usually 12% for leather shoes, plus a small administrative fee of something like $ 10. The shoes have cost me a total of 695 USD (500+60). I in Europe had to pay no less than 74% more for a corresponding import than an American customer had (the minimis level for most EU countries is € 150, around $ 170, but we have to pay VAT for all imports).
Not only that, when an American who bought European, shoe from Europe, they paid considerably less than a European purchase that does that shoe (20% less given VAT is removed). I don’t think anyone can look at it and think it’s a fair balance. Of course it has led to many more American customers purchasing shoes from Europe online than the other way around, buying Europeans online from the US.
Why the removal of the US The Minimis -Extending is useful
Given the unique high -Marican level earlier, and that the current rules where all input is imposed from tasks and etc. is more standard than the old, the new situation makes the US more leveled, looking at this part. The problem, as I see, are the new rates. Instead, they are unbalanced in the other direction, where in most cases it is higher than the other way around than the US.
If the US had just removed the minimis -exceptional, this would mean a change for Americans, but not a huge one. It would also be positive in many greetings for American brands and companies that have purchased from abroad (not only finished products, but also materials, what most American shoe manufacturers do), since the competition with favorable imports from abroad would be more limited.
For shoes, the regular American import tasks for leather shoes are normally between 5-12%, in my previous article about the rates I used 8% as an example, and to have added that plus a small administrative fee would not be so bad for American customers who shop from abroad. Again with EU as an example, if they were to buy here, it would still be far below what a European would pay in their own country.
But now that with the rates on top of existing tasks added, it is a large increase in costs compared to earlier (even if it again, with the EU, the total amount more or less resembles what we pay Europeans). Especially when it is purchased from high rates countries, it is a crazy difference from earlier. Not good for American customers, and not for international companies (even if I know that Trump doesn’t care. But I do).
Conclusion
Apart from the actual problems that the new changes run, the uncertainty caused is probably worse. Just the fact that many shipping companies are not even sent to the US for the time being, because they do not know how the removal of the minimis will work, and they say they don’t get enough information. The American Customs system is also known for its high administrative burden, for all involved, so if every package has to go through these things, will probably be slow. Hopefully it will clean up with time, but the risk is that both consumers and companies have taken hits by that time.
Personally, I am entirely for global free trade, or at least free trade agreements between areas / countries with comparable economies. I think it is the most advantageous for most people. Since we are not in such situations, it is at least better if there is a balance between trade measures. The removal of the highest minimis level in the US is a step in balancing things. The problem is that it is done in combination with new rates that have been added on top of previous tasks, which is a step in the other direction.
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