Prior to this tarrif chaos there wouldn’t have been any duty for probably 99% of consumer purchases - the de minimus exemption applied to packages worth less than $800. From what I can tell, it was actually $800 per person per day so it really would apply only to a single item worth more than $800 - because shipments of multiple items with lesser value can be broken up so I don’t import more than $800 in a single day.
And therefore it’s really hard to tell how a exactly consumer will pay the duty. Would the foreign shipper raise the price to be inclusive of the duty - maybe. But they don’t have to. I do know that under normal circumstances tariffs and duties are paid as the item crosses the border, just like I would pay the duty on items over my duty-free allowance when I re-enter the US with the items. And no one from CBP asks for my agreement before charging me the duty at that point. Presumably, if I refuse to pay, I will have to abandon the items.
CPB does not care about what you agreed with seller as to who will pay. Someone has to pay , that would be the importer of record . I’d you hand carried it over that’s you , you pay, if the seller shipped via dhl and you are picking it up form somewhere past the border someone paid and again , depending on what was agreed between you and the seller they will have to pay the importer of record.
The act of getting goods across customs requires someone to pay. Customs don’t care who.
Who paid and how they get reimbursed ( if at all ) depends on the conditions of sales that was agreed between the seller and customer.
People have experienced many different contracts from the seller paid ( delivered duty paid) to having to do everything themselves (ex works) , but should not confuse what they have seen as any expectation of there being a standard or default way.
Regarding conditions of sales or contract, for the person to person sales , yeah there probably isn’t one, and people are ok to take that risk . If you are buying from a company, the buyer almost certainly agreed to some conditions of sales that were contained in the quote, or the final sale agreement. Those may have been size3 font in pale yellow on a white background , but there were very likely there.
If the seller has been traditionally sellling the country delivered duty paid ( and we were dealing with a lot of providers ) who sold stuff to us from overseas and delivered it , covered all the duties and that was that. A lot of them renegotiated last year as there was lot of uncertainty, for some we went to delivered but we paid duties, but we got a lower price which covered some of our risk and there were some duties baked into the price we were paying anyway. Others didn’t and we have agreed contracts , subsequently they are negotiating. We could say ‘ tough you signed this’ but then they won’t have to provide and having a supplier in dire financial straits doesn’t help my business, so I am sure we will end up accepting some temporary surcharge which can adjust if tariffs go away. As these are raw materials that get made into a finished product ( made in the us) how we chose to pass on those increased cost to our customers is up to us.
In all cases a freight forwarder and agent is involved they handle the mechanics
Anyway , who directly pays the tariffs - the person who gets it over the boarder ( seller buyer 3rd party agent freight forwarder) . Who pays them - depends on what was agreed .
Exactly. I work for a Chinese manufacturer; when asked about the US tariffs our CEO stated plainly that the issue isn’t the tariffs, but the uncertainty around the tariffs. No one wants the cost and disruption of moving manufacturing only to have the situation change again and again.
My friend works with local manufacturers and he told us about one of his clients that sells low margin goods to Walmart. He had three containers from China arrive at port with new tariffs that were enacted during transit. The tariffs ate all of the profit and he was debating whether they were even worth accepting. While he was dragging his feet, the tariffs were paused. He lucked out that time, but you can’t run a business properly with that much uncertainty.
Unless you have an ongoing business relationship with the foreign manufacturer, my example above with the toymaker likely applies:
You order someting. To have them ship it, you pay up front. They ship it. If before it arrives to you, a tariff is imposed - then you will have to also pay the tariff to accept delivery - either pay the customs broker, the shipper (who likely acted as broker, like DHL or Purolator or FedEX) who paid it for you, either on delivery or before it is released at the border.
Not too many shippers will sell something retail without payment up front. So they have your money.
If you decline the shipment because the tariff amount was unexpected - the seller has your money; do not be surprised if they charge a restocking fee and/or cost of return shipping before refunding the rest of your money.
I’m not sure what happens if - let’s say DHL pays the tariff then attempts to collect from you on delivery but you refuse. Can they then ship it back and file something with customs for a refund because the goods did not remain in the country? Presumably charging the seller for the return trip?
And that’s another problem with the “seller pays the duties, builds it into the price” plan. How do you do that if the tariffs can change by huge amounts in the time between shipping and receiving?
Easier to just forget that, and let the buyer pay whatever Customs tells them to pay, to get the shipment out of the customs house.
And this is why you’ll see a lot less of delivery companies paying the tariffs up-front, and then getting paid back by the buyer on delivery. Look for a lot more invoices being sent out, to cover the tariffs before the delivery company even tries to get the package out of customs. They’ll get a list of what is owed on each shipment, and stick Customs with the stuff that people decide not to accept.
This is the crux of the problem. Also the tariffs being different for each country even if they aren’t constantly changing. How is a consumer supposed to know? I ordered about $400 worth of bicycling apparel from a European outfit based in Spain but that has warehouses throughout Europe. It’s a discount operation so orders of multiple items may be picked from warehouses in different countries, thus it can take weeks before it actually ships. I have no idea how many warehouses my items came from, but it ultimately shipped from The Netherlands via NL Post and then USPS to get to me. The whole process took 5-6 weeks.
While I was waiting for it I started to worry, is the de minimus exception still in effect? If it was in effect when I ordered it, what if that changed before it got to US customs? Will the USPS hold my package hostage until I pay a tariff? How much will the tariff be? Would it be based on Spain? The Netherlands? The country each particular item was warehoused in? The customs declaration states the country of origin for everything is Spain, but that’s not really true.
I figured I was in the clear when the package was delivered, but now I hear that they can bill you after the fact. The lack of transparency/discoverability is the big problem here, especially when the tariff could be 100% and you don’t know that until you try to take delivery. This may be old hat for folks who regularly import big-ticket items, or for non-Americans who regularly buy from foreign stores, but the typical American retail consumer isn’t used to this at all. Some online stores just said “screw it, we’re not shipping to the US anymore.” So much winning.
Yep, and that’s the other option Trump never mentions. I have a friend who runs a small martial arts equipment company that does mostly mail order sales, based in Canada, and he basically told the US customers, “You probably shouldn’t bother ordering from me now.” He hasn’t officially cut off US sales, but it’s clear that the tariffs made everything worse.
Up until the current chaos it was a completely reasonable way of doing things , and done quite a bit. With the current situation, probably a bad idea , although a bit of a problem if a longer term contract already exists . As others have said , uncertainty is a huge obstacle to efficient business. Building large plant or big investments are not happening with the nonsense going on. Some companies have suggested they will ( I think a few car manufacturers have said the may expand or build new facilities) if that actually happens we will have to see.
The de minimis removal has already impacted bead workers and jewelry makers; I used to think nothing of hopping onto Etsy to grab a few things, but now some sellers outside the US have simply stopped doing business with US customers. And to make things more complicated, some popular bead lines are vintage, meaning there’s no certificate of origin available.
Also note the tariffs are based on country of manufacture, not where it shipped from. In fact, one aspect of the imposition of tariffs is the US complaint that some companies are trying to ship through third countries to disguise country of origin and avoid higher tariffs. Fortunately for the bike parts, it appears there is a single rate for the entire EU.
The thing is goods from Canada are still pretty much exempt under UMCA (NAFTA), current estimate is 93% of goods. Except, obviously, any steel or aluminum, softwood lumber, autos, etc. depending on the USA crisis of the day. The problem is paperwork - how much work does a Canadian company have to do to, say, cloth from India to make it sufficiently a North American product and thus exempt? Current Detroit assembly procedures for cars mentioned in one article said for example a transmission and its parts might cross the border several times back and forth to Windsor or beyond during full assembly. Does it pay full tariff each time, or only on components, thus inflating the price of a car for the big Detroit two-and-a-half? The tariff system - arbitrary and not fully documented - adds uncertainty to the total price. Meanwhile, the price of a BMW or Kia or VW or Toyota in Canada is not affected. Let’s hear it for US government’s business acumen.
(For now, apparently, the Detroit auto makers have not raised prices significantly, have taken a serious hit on profits, hoping the tariff rates will eventually settle down(ward). But that can only endure so long.)
It occurs to me it might become a strategy for some businesses to warehouse in Canada, rather that paying entire container-loads of tariffs at once. Only pay tariffs when the goods are required in the USA, with the hope that tariffs (on country of origin) may change by the time the goods are needed.
I’ve experienced tariffs once under the old rules when I ordered an expensive gold Claddagh ring online from a jeweler in Ireland. They told me in advance that I would be responsible for any duties, taxes, and fees.
The item was delivered, and a short time later I got an invoice for the import duty and some fees (including a duty collection fee) from FedEx.
(Connecticut also has a state sales tax, which I was apparently supposed to pay on the item when I filed my state income tax that year. And U.S. Customs apparently informs the state of this, so I got a dunning letter from the state—at which point I paid the state sales tax.)
P.S. I also ordered some biking shoes from Italy a few years ago, and paid no import fees whatsoever. They must have been under the de minimis threshold in effect then.
Isn’t Maersk more of the shipping company, just moving the containers?
When I worked in importing into Japan, we did some container loads (a few per month) but most of our shipments were FedEx, DHL, etc.
We would deal with the freight forwarder who would make arrangements with the shipping companies, customs brokers, etc.
Most of our suppliers sold goods FOB (freight on board) which means they paid for shipping to the point where it was on the vessel, or ex works (where we had to pay for transportation from their factory).
In both cases, any import duties or tariffs were our responsibility. I never dealt with a company that provided a price to our warehouse.
Yeah, container ships don’t technically move anything across borders. They unload them into the no-man’s land of uncleared container yards and bonded warehouses until customs are paid by the receiver or their agent.
You wouldn’t pay the driver in cash. They usually have a credit/debit card reader, and they also have an official invoice. It’s no more likely to be a scam than paying a waiter at a restaurant.
What if the items in question are something I took with me when I left but could also have conceivably bought during my trip? Let’s say I’m going to Japan and pack my Canon EOS R5 Mark II along with a few L series lenses, or maybe I’m going to Switzerland and I’m wearing my Patek Philippe watch (no, I don’t actually own such a watch). Am I likely to be challenged by customs when I’m getting back from Japan or Switzerland and asked to pay a tariff or import duty of some kind? Is there some sort of mechanism to declare items before leaving on the trip?
I don’t know about UPS specifically, But I’ve seen all of:
Pay the driver when they knock on the door
Receive an invoice to pay prior to a delivery attempt
Receive an invoice after the item has been delivered
Really, this is that old “American Exceptionalism” thing again. Once again, Americans are confused about how to do something that many, many other countries have been doing routinely for years, even decades.
