End users buying goods from out of the country, how are tariffs paid?

Factual Questions
1

FQ? Politics? Somewhere else, I’m not sure, but it’s technically factual question, so I’ll start it here.

We can skip the hypotheticals and jump right into the actual situation.
There’s a product I’m looking to buy. It’s oversized and, as such, the shipping is rather expensive. The few places I’ve checked are $150-$350. However, one place is closer to $50. As I went to order, I noticed that they’re in Canada. On the checkout page is this:

There has been some rule changes with Cross-Border Shippers regarding manufactured products crossing the border due to the new tariffs now in place. We will be requiring the customer’s Tax ID# as a reference for all products shipping to the US that come from our stock. This can be found on your W-9.

This includes any orders for the Camera Systems, Proxi-Cam Systems, LED Pedestrian Lights, Battery & Propane PPE products, Fall Protection products, Back-Up Handles, Acrylic Mirrors.

There’s no tariffs added on when I start checking out and my concern is that I’ll get a bill from whoever is crossing the border with it. FedEx or DHL, I’m guessing.

When I noticed that, I decided not to order since I didn’t want to get stuck with a surprise bill. Even if it’s 25% it brings the total, with their $29 shipping fee to almost the same as what it would be to order it domestically (where it’s made).

FWIW, this item is only $300 (below the $800 limit I heard is, or at least used to be, the threshold for applying tariffs). And, while I’m the end user/consumer, I’d be purchasing this as a business.

I should probably shoot them an email and ask them these questions.

2

Was.

3

Was.
+1

This is not a co-incidence and neatly demonstrates the main cost to the economy of a general tariff and who actually pays it. Domestic producers/distributors/retailers increase their prices to be competitive with the imported product inclusive of duties and other import charges.

4

Sitting here on my desk at work is an invoice from FEDEX for $701.50 for something I ordered via a PO to the vendor, which shipped via Fedex. The invoice includes copies of the DHS paperwork from the border entry - declarations, etc.

I have also had to do change orders to previously-issued POs, to add additional funds to pay the tariffs, which appear as a separate line item on the invoices.

In my experience, the recipient pays, despite what I hear about recovering $$$ from the furriners.

5

In Japan the post office tells you to pay in order to receive your item. That happened before they me.

6

I’m not exactly sure what your question is since the obvious answer is that it’s the buyer of the product – the end user – who always pays the tariffs. As to how it’s administered, in my experience of ordering US goods from Canada, it’s the shipper who collects the duty fee from the buyer and then passes it on to the government. The point in the process when the buyer pays the fee varies with the shipper. Sometimes it must be paid in advance while held in customs, sometimes on delivery, and sometimes it’s billed after delivery.

7

Of course. If the seller’s costs go up, so do their prices to the customer. The whole point of a tariff is to discourage consumers from buying from abroad.

8

This is how it’s done: the shipper collects the duty and passes it on to the government. That shipper can be a foreign post office passing items on to USPS, or all the way via a private courier (e.g. UPS, FedEx, etc.).

I (in Canada) occasionally order things from an American business. They always ship via UPS, and I just pay the UPS driver the duty and customs brokerage fees when the item arrives. (Shipping was paid for up front, and calculated into the price.) I should add that that is normal, as we have an absurdly low de minimis exemption. But being as it is normal, we expect it. I guess you have had no experience with this sort of thing.

But as others have said, you’ll pay the tariffs to the shipper, who will pass them on to the government.

9

I changed the title to reference the country, rather than the county, as that appears to be the intent.

10

Begging indulgence from the FQ rules.

I can tell you that from talking with hundreds of people in dozens of countries who purchased tariffed goods from overseas the buyer pays the tariffs (mechanically speaking) as part of the shipping/handling/clearing costs, and understands that they are paying these tariffs. In many cases there is no domestic supplier (book not distributed locally, for example)

Except American consumers. Until recently very few have purchased a tariffed product from an overseas seller directly. They expect someone or a combination of someones in the chain (seller, carriers, clearing & forwarding, ecommerce platform, credit card company) to either absorb the tariff or to quote the price originally including the tariff.

I’m even seeing this in the commercial space. People at my company who were importing paper products directly from Canadian suppliers are demanding that they get a rebate from the Canadian producers to cover the tariffs we have to pay on the shipments. It’s not in the terms of the Purchase Order, but they think it’s so obvious it need not be stated. And they want guaranteed prices for shipments in the future, regardless of what changes might occur in the tariff schedules.

11

Until quite recently, the $800 de minimis rule meant that tariffs rarely mattered to US consumers buying goods overseas directly. I’ve bought tons of stuff from out of the country, and 100% of my individual purchases were less than $800.

12

Also, I’ve noticed recent contracts (like a Kickstarter that will be built out of the US) explicitly spell out that i will be responsible for any tariffs. That one is expensive enough that I’m hoping the tariffs aren’t too high when the time comes to ship it.

13

In my case, this is the exact same product, made by the exact same (domestic) manufacturer. I just happened to find the best shipping price from a distributor in Canada. I assumed the price being higher reflected their markup (and any import taxes that may have been applicable when they brought it into Canada). Also, even ignoring tariffs, the higher price they sell it for probably helps cover some of their shipping costs since the $29 flat rate probably isn’t going to be enough.

I buy an item from Canada that’s listed as $300. I pay them $300 and they ship it to me. Then what? Assuming a 25% tariff, who is going to come knocking at my door asking for their $75?

In my case, that’s what’s likely to happen. The cost to bring it in from Canada is fairly close to buying it domestically. It’s cheaper for me to bring it in from Canada, but I don’t feel like screwing around with tariffs. That may well change the next time I want to buy something for personal use that’s $1000 domestically or $500 from China via AliExpress. But to save a few dollars in a B2B transaction, I feel like the potential for a headache makes this not worth it.

14

As said above, the people delivering the package, most likely. UPS, FedEx, those guys. Sometimes it’s literally a knock on the door by the delivery driver. Sometimes, if they have an e-mail address or some other contact info, they’ll send you an invoice before final shipment to your address.

15

This just happened to a coworker yesterday that had ordered something from the UK. The UPS driver knocked on the door and wouldn’t deliver the package unless the tariff was paid on the spot. I think the tariff amount was about equal to the price of the product ordered. So to get his $100 order he now needed to pay an additional ~$90. He rejected the package and said return it to the sender.

16

What happens in a case like this? UPS (or whoever) has already been paid the shipping costs, but not the return shipping costs. Should one expect a refund? I suppose it varies.

17

I wondered that myself. Assuming UPS has already paid the tariff in order to collect the package, there must be some sort of refund process. But what an administrative nightmare!

And will the seller consider it a legitimate return if the buyer rejected the goods only due to tariffs? Or if he has to contest the charges through his credit card, will the seller ultimately win the dispute because they did provide the goods as ordered, he was the one that failed to account for tariffs?

18

Agreed. Why should the seller refund the purchase price? They fulfilled the contract.

19

Incoterms are the thing to google as to who actually arranges the shipping and pays the cost of shipping tariffs etc. Now these are terms used to easily clarify some of the conditions of sale , and anyone can negotiate whatever they want if they have the time , but they broadly describe who pays for what.

If you buy something ex works , it will be at the loading dock of the factory and you will have to arrange everything from there. The definitions go up delivery at place unloaded, where they deliver it to you, but you still pay the duties to “delivered duty paid” where the seller gets it to you with all duties paid. So who pays duties depends what was agreed during the selling . ( often delivery duty paid the duties are buried in the price but you won’t have to deal with the hassle of paying)

There will be an ‘importer of record” who is typically the logistic company or an agent and they are responsible to do the declarations and deal with the actual paying the fees before the item is released from customs. Often large companies will have a bond set up so when the importing agent of record declares everything to US customs, US customs just takes the money from the bond and the goods are let through. This saves time and makes sure things don’t get held up waiting for payments or the importer of record carrying large liabilities.

In the situation where someone bought something and then fedex sent a bill to the buyer for the customs amount it was likely sold delivery at place unloaded , so the seller arranged all the logistics ,however the buyer will have agreed to ultimately pay the duties. FedEx as importer of record paid the duties but now wants the duties back from you as was agreed in the sales contract or sellers terms and conditions so read those documents carefully.

So who pays duties to US customs, the importer of record. Who pays them directly, depends on your conditions of sale could be buyer or seller, Who ultimately pays , probably the end customer unless the seller doesn’t want to pass on the costs for what ever reason.

How

20

I also have an invoice on my desk currently from a Canadian manufacturer. The initial quote was for a single machine part $3,495, and material cert $65. Shipping collect. Made out the PO for $3,560.

Our AP department today received the invoice for both line items along with an added line “Tariff Recovery Surcharge” $2,097.