What happens is that when the shipment goes through US Customs upon entering the US, the tariff must be paid before the shipment will be released by Customs. For a consumer importing an item directly, that payment will almost always be made by the shipping company as part of their terms for international shipments. The shipping company will then typically collect from the deliveree prior to handing over the item/s, or in some cases send an invoice to you separately. In that case they lose the leverage of withholding delivery till the money is paid, but it’s still a real debt they can send to collections and hose your credit rating etc if you don’t pay.
So UPS (or whoever) fronts the money to get the item through customs, then wants you to pay them back.
In commercial settings this isn’t how things are usually done. Companies will usually retain the services of a customs broker. The broker will have an office right at the port of entry, and will be the addressee of the shipment from the vendor. They will handle duties/tariffs etc and paperwork relating to such (for example USMCA docs and the like that would modify what monies are owed to Customs) and then re-ship the item to the purchaser.
I expect the mechanics get different again at even larger scales. If you’re Toyota US and you have an entire ship loaded with Corollas just docked in San Francisco, you probably have a department to handle the dealings with Customs in house.
Shipping collect would normally mean the customer is paying for the shipping and customers, although the seller may arrange and pay to get it all done all bill you for it but it’s the same thing, the shipping and customs is not included in the quoted price of the good.
If you company actually paid the freight and customs directly through your own methods then that surcharge may not be your problem.
As to what ‘tariffs surcharge’ is you would have to ask the seller, is that the fright and customs or just an add on they thought they could get away with. Asas always check the terms and conditions on latest of either the quote your PO or their sales confirmation ( which is the usual order of precedence for terms and conditions with sales confirmation the highest )
No, it’s the importer that pays the tariff. The importer of record, may choose to pass along the tariff as an increase in price or a fee, or they may choose not to.
But it depends on the conditions of sale . If the condition of sale were duty paid, then the selIer is paying.
If the condition of sale were otherwise the buyer may see a separate line item on the invoice for duties or may have to have arranged the shipping and freight forwarder themsleves. The duties may have been paid by the importer of record but the bill will end up with the buyer. Because you buy something it doesn’t make you the importer of record , but you may have to pay them . It all depends on the conditions of sale.
I don’t get it? If order something directly from some Canadian company, then i am the importer. And I’m pretty sure I’m also the “importer of record”.
Fwiw, because i collect mechanical puzzles, many of which are made elsewhere, I’ve imported a bunch of stuff. It always arrives with a customs stamp. It’s also always met the de minimis tariff exemption, so I’ve never actually had to pay an import tariff. But I’m expecting to going forward.
Is this how it actually happens? If I buy a INR 5000 widget from an Indian online seller and they ship it to me via DHL, do you think there are “conditions of sale” that they are agreeing to. In my experience, I agree to pay INR 5000 via my credit card, I get a charge of the Euro, GBP, Singapore dollars, whatever equivalent in the country I’m in. Then when DHL notifies me I have to pay whatever the tariff is or I don’t get my item.
As Puzzlegal says this is not an experience many Americans have because there was a de minimus exemption. But people in countries all over the world have been experiencing this for decades now. Even before the internet, there was mail order. I would have to send an international money order in GBP to the seller in UK for a tennis racket (Dunlap McEnroe Autograph Graphite!) but that only covered the racket’s retail price. Shipping and duty were due when I went to pick it up from the DHL office at the cargo terminal at the airport.
Not sure where the third party, the “importer” comes in.
I guess a way to look at it was ‘ did you import it ?’ Or ‘ did you arrange to have it imported?”
If you filled out the customs declarations giving the HTS codes and coughed up some cash to customs you are likely an importer and probably importer of record . If you ordered from someone and it turned up with the paperwork , but you didn’t handle any of the details , you arranged to have it imported, even if you get a bill for the services provided later . Prior to this tariff chaos for most items for end consumers it probably would have been “delivered duty paid” so no one ever saw the duties because they were wrapped up in the price . Now with , this, in some cases sellers don’t want to raise prices but are still selling as delivered duty paid, but want to recoup the duties , as to what the buyer accepts is up to the buyer, but not after the price has been agreed .
There almost certainly are conditions of sale in all the things you signed or clicked on that you agreed to, even if it wasn’t obvious as to what you agreed to.
If it was something you paypaled them some money they just threw in an envelope and avoided all the customs then that’s a different story.
For sure the de minimus exception made life very easy in the past and deciding who paid duties was never an issue. Now it isn’t.
In order for DHL to send it to you they would have made sure they had the right documentation to ship it and an agreement as to who would reimburse them for the duties. The seller may have proof that you agreed to pay duties even if you didn’t know you did.
The seller doesn’t have any need to do any of this. The shipper simply holds the goods.
Unless the conditions of sale specifically say the seller is responsible for duties, they simply aren’t. That’s the default. The government of your country cannot assess duties on someone in another country. You are the person subject to their jurisdiction.
Now when my company buys container loads of products from a seller in another country, there will be all kinds of terms specified. But guess what, we are not getting the goods unless the duty is paid. If not specified, I believe under ICC rules the “importer” pays. And my company is the importer. Not the seller in Canada, not the freight company, not any customs broker we employ. The buyer, my employer.
It all ends up as a bit of splitting hairs over the question of ‘who pays’ and what that means.
the importer of record hands over cash to Us customs, or it won’t cross the boarder ( FTZ is a whole other story)
Someone depending on conditions of sale will hand over cash to the importer of record ( and the buyer or selller could be the importer of record)
What the agreed price for the goods was may or may not include logistics and tariffs, depends on conditions of sale.
If the seller is on the hook for tariffs based on condition of sale and if they try to pass on costs to the buyer , depends, see conditions of sale and what they think they can get away with.
Who ultimately pays , I’d say 95% of the time, either directly with knowledge, indirectly with knowledge or had no clue, probably the end consumer.
I mostly but stuff from another individual. We didn’t sign documents and have formal conditions of sale. I send them money (that’s gotten much easier recently!) and they wrap up the puzzle and ship it off. The package will say what it is and how much it’s worth.
Unless you are saying that DHL is the importer of record? But i have no contract with DHL. My only contract is with the seller.
Now, i did backed a Kickstarter recently that explicitly said (in the small print) that i agree to pay any duties owed. But i backed that in the peak of tariffs being in the news. I’m pretty sure tariffs have never been mentioned in any other international purchase I’ve made, except once when i emailed a small puzzle company and mentioned that i was buying some puzzles before the tariffs went into effect.
The government only determines what needs to be paid for things to cross the boarders, someone has to pay them so the goods will cross the boarder.
As you say , what is specifically agreed to is what should happen, there are no default options.
What you agree to pay the selller in whatever country are the conditions of sale. If the Incoterms are duty paid delivered for $1000 dollars they need to deliver the item to you for that price and you won’t see any extras.
If it’s Exworks you arrange and pay everything, and then there all options in between, look at the Incoterms for te generally accepted options.
There is no default, it’s what is agreed. However someone has to pay Us Customs and if it’s a 3rd party that clears the goods , someone has agreed to reimburse them. When your turned up and paid the fee at the port or airport for delivery , you paid fedex , and they won’t give you the goods until their fees are covered. Other options exist if the importer is ok with billing you later.
If the seller agreed duty paid and delivered but balks at tarif charges and does not pay, the goods won’t get to you and stay at tbe port. The shipper can eventually action that off to cover shipping and surge fees . You have to decide what to do with the seller in getting your money back for the goods not received , agin depends on what you signed up for .
Exactly. Here in Canada, we pretty much get taxed on everything we buy from overseas and the US. Of course, we can bring souvenirs home from trips abroad, duty free, but only up to a certain limit. But ordering stuff from abroad without actually going abroad? That will always be taxed.
I’m surprised that Americans never experienced this.
FWIW here in NL i must pay import duties to the post office when I get something from abroad.
I pay those duties to the post office. They tell me “hey, you got a parcel from X. You have until such date to pay online (and then we will deliver to your home). After that date your package will be kept in such and such office for pickup in exchange for in-person payment. And after such and such final date the package will be returned to sender if you don’t pay.”
It seems to me that the entity that ends up getting the money from the final buyer who imported the goods (because they possibly have had to pay the tariffs up front at the border) is the delivery company.
The de minimis for Canda is something pathetic like $25. The de minimis for USA was $800. I remember ordering a custom photobook several years ago, and to pick it up from the FedEx depot here in Canada, I had to pay the duty on a $80 photobook. As others point out, the threshhold in the USA has been so high that almost everything consumers buy privately was not taxed. Changing now. You will pay.
To reinforce what others have said - whoever is taking the stuff across the border pays the tariff/duty. So FedEx or Purolator (or Cosco or Maersk if it’s a container) or whoever owes the money to the customs at the border. If the sender did not pay, then the recipient does. If the sender paid, then the cost is reflected in the price. If the recipient pays, they likely are billed by the shipper and added to the account if it’s an ongoing business, or COD if it’s a one-time transaction or smaller business.
I’ve seen Instagram posts recently like one from a small toymaker “we shipped to the USA, this time Customs added a tariff. Because of this, the customer refused the shipment, and sent it back. Now he’s upset because we are deducting the cost of the return shipment from his refund.”
There was an article I read recently that claimed that the Chinese especially were exploiting the de minimis, often shipping container-loads of products allegedly intended for different destinations in under-$800 packages, and then changing the destination once it arrived; or mis-stating price, or claiming the packages were intended to be shipped onwards to Mexico or Canada.
My experience here in Germany is similar to @JoseB ’s in NL. Three additional points that I have experienced:
in one instance with a parcel from a small US company I was notified that I had to visit the regional customs office for pickup (just ~ 20 km away, fortunately, and in the vicinity of a regional rail station). It turned out that the invoice did not specify the merchandise precisely enough for German customs to be able to pigeonhole it in a tariff number (a model name of the gadget but no description of what it was supposed to do, and no explicit customs code). After describing at the counter what it was a tariff bill was made out (mostly VAT, a minimal tariff) and I paid on the spot.
Otherwise I mostly have paid the customs charge COD.
What I have to pay is mostly import VAT not a tariff charge. The import VAT is the same rate that I’d have to pay when buying from a domestic vendor.
Of course when buying from vendors in another EU country there is no customs processing involved. There have been instances where I ordered from Amazon and tracking showed the parcel was sent from a warehouse in Spain, Italy or Poland because that’s was where the item was in stock. Last year there was an annoyance when ordering from a vendor in the UK - they still had not got the hang of not being in the EU anymore, so they billed the price inclusive of UK VAT (which they should not have done when exporting) and on receipt I had to pay German import VAT on top.
We’ve had a world where everything foreign was tariffed, and recently one where very little was significantly tariffed. What the USA is trying is a world where they erect a wall, and outside that wall in the rest of the world is the level of free trade that existed, and anything coming over that wall pays a tariff. The conceit is that it will bring back jobs to the USA - but the question is now whether this is permanent enough for manufacturers to commit to a years-long investment to build new factories and whether the resulting factories can still be competitive. And because their competition is the tariffed price of incoming goods, whether they have enough market internally to sustain the factory, or whether they can compete with the rest of the world’s non-tariffed prices.
This is what confuses Trump an his minions. The USA is rather unique in not having a VAT sales tax. So items imported to the EU (etc.) pay the VAT on entry, in the same manner as a tariff. Items coming to the USA, the vendor in the EU (or UK, or Canada…) can claim back the VAT. The free trade theory is that the receiving jurisdiction will then equalize by charge its own VAT, but the USA has none. So the Americans think the EU is charging a 15% (or higher) tax on their imports, where in reality it is just taxing them same as every other good. No wonder the EU has no problem with a 15% tariff.
Unless the US manufacturer can compete with (Chinese price + tariff) the result will be the Chinese carry on and the American customers experience higher prices… then inflation. Which explains why the Fed is hesitant to lower interest rates short term. Meanwhile, American companies aren’t going to be able to export and compete with China to the rest of the world.
And, at least up until now, the nature and amount of the tariffs have been something that has fluctuated on a daily basis, depending on the latest trial balloon from Trump, his “negotiations” with various countries, and his mood. I have to believe that U.S. companies are largely going to be unwilling to invest when they can’t even predict what the tariff situation will be next week, much less several years down the road, when those hypothetical factories would finally come online.