Trump's "de minimis exemption chnages

[Miclop]

OK, a somewhat serious topic.
Hopefully Trump's "de minimis exemption" removal on parcels by post or courier into the US doesn't get picked up and replicated into other countries as the impact could be painful. If you haven't heard or read about it, there's a snapshot below. Bottom line is that many drop shippers, online sellers (China), and postal services (I know for sure India and Thailand) have suspended parcel shipping to the US.

My concern is that countries may pick it up and use within their systems, yes, maybe even Australia, adding 10% or more.
Equally concerning is that the costs for shippers, and postal/courier shipping operations to meet the US new rules will roll through into product and delivery costs at some point in time. Again, my interest stems from my Kamagra supplies (lol)...

Thanks ChatGPT for this...

What’s Changing: Removal of the De Minimis Exemption

• Definition: The U.S. de minimis exemption allowed imported goods under $800 to enter duty- and tax-free, bypassing full customs processing. This threshold was raised from $200 in 2016 and significantly boosted low-value e-commerce imports.

• Phase-out Timeline:
o May 2, 2025: Exemption ended for packages from China and Hong Kong.
o August 29, 2025: The global suspension of the exemption starts—now affecting all countries.
o July 1, 2027: Full statutory repeal via the “One Big Beautiful Bill Act.”

Why the Policy Shift?

• Abuse & Security Risks: CBP cited exploitation of the exemption for smuggling drugs, evading duties, and flooding the U.S. with low-cost imports. In FY2024 alone, over 1.36 billion de minimis shipments entered the U.S.
• Revenue & Enforcement Concerns: The move aims to close loopholes, recover lost duty revenue, and ensure safer, fairer international trade.

Impact on Postal Services

• Global Postal Network Disruption: Major postal services (European and others) are halting or delaying shipments to the U.S., citing unclear duty collection protocols and a rush to adapt by August 29.
• PostEurop’s Warning: The organization behind European postal operators warned that without clear guidance, postal shipments could be suspended, especially for commercial goods.

Effects on Dropshippers & Online Retailers

• Increased Costs & Compliance: All retail shipments—regardless of value—must now pay applicable duties and follow full customs protocols.
• Temporary Flat-Rate Duties: For postal shipments, a 6-month grace period allows carriers to use either:
o A fixed duty of $80–$200 per item (based on tariff level), or
o An ad valorem duty, based on the value and country of origin.
• Operational Strain & Penalties: Shippers must integrate customs processes (e.g., ACE submissions, proper origin declarations). Compliance failures can result in fines—$5,000 for a first offense, up to $10,000 for subsequent ones.
• Retail Market Impacts:
o Platforms reliant on low-cost imports (Shein, Temu, Etsy, eBay) face rising prices, narrower profit margins, and potential revenue loss.
o Customers can expect higher prices, longer delivery times, and possibly fewer niche or budget products online.
o One projection anticipates a 75% drop in annual de minimis package volume after implementation—from ~800–900M to 200–300M shipments.

[dellguy]

I'm surprised Australia hasn't simply followed the model New Zealand moved to a few years ago when they scrapped their de minimis.

All goods imported into NZ regardless of the cost are liable for GST, with the GST being charged by the foreign retailer. It's a legal requirement for any retailer selling over $50,000 worth of goods to be registed for GST and to charge it.

While there are clearly plenty of loopholes in this the reality is that it captures all the big overseas retailers, ie Aliexpress, Temu, Amazon etc who make up the vast majority of imports both volume and $ wise.

[GoldfishMan]

I'm surprised Australia hasn't simply followed the model New Zealand moved to a few years ago when they scrapped their de minimis.

All goods imported into NZ regardless of the cost are liable for GST, with the GST being charged by the foreign retailer. It's a legal requirement for any retailer selling over $50,000 worth of goods to be registed for GST and to charge it.

While there are clearly plenty of loopholes in this the reality is that it captures all the big overseas retailers, ie Aliexpress, Temu, Amazon etc who make up the vast majority of imports both volume and $ wise.

You think that was a good idea? Even their Gov admitted it's near impossible to police.

[dellguy]

You think that was a good idea? Even their Gov admitted it's near impossible to police.

It's actually been pretty effective. Yes there are plenty of loopholes but there are thousands of big name overseas sellers now GST registered who are collecting GST. You can't buy anything from a big name online retailer and avoid it.

For a government what is the better option? Do nothing, or implement something like this which might capture GST on 75% of goods that cross the border?

As much as I like getting a bargain I do share the view that buying something from overseas that is GST free is kinda unfair when local retailers have to pay GST.

[GoldfishMan]

It's actually been pretty effective. Yes there are plenty of loopholes but there are thousands of big name overseas sellers now GST registered who are collecting GST. You can't buy anything from a big name online retailer and avoid it.

For a government what is the better option? Do nothing, or implement something like this which might capture GST on 75% of goods that cross the border?

As much as I like getting a bargain I do share the view that buying something from overseas that is GST free is kinda unfair when local retailers have to pay GST.

EDIT: CBFed to argue the point. Whatever floats your boat.

[Miclop]

You think that was a good idea? Even their Gov admitted it's near impossible to police.

I'm with you goldfish
The likely bottom line is that it's done nothing for NZ consumers except to probably delay direct government income tax hikes on them a little bit.
What it has done is just directly feed into the governments tax coffers.

Which is what has happened in the USA with them recording huge jumps in import tariffs.
The difference between the US and NZ, and I would argue Australia, is that the import impost will encourage competitively priced production in the US.
For NZ (and Australia), its just a tax grab as production will not occur in Australia...

And before you argue about local shops having to pay tax, and overseas ones not under de minimis, for me it's about economies of scale and immediate benefits.
I will always shop local for things I need to see, feel and choose, for those routine items price and scale economies wins out for me and most people every time.

[aussiegaigin]

I'm surprised Australia hasn't simply followed the model New Zealand moved to a few years ago when they scrapped their de minimis.

All goods imported into NZ regardless of the cost are liable for GST, with the GST being charged by the foreign retailer. It's a legal requirement for any retailer selling over $50,000 worth of goods to be registed for GST and to charge it.

While there are clearly plenty of loopholes in this the reality is that it captures all the big overseas retailers, ie Aliexpress, Temu, Amazon etc who make up the vast majority of imports both volume and $ wise.

Australia has had this for a while. Many of my overseas purchases have had GST added by the sellers.

An article in the SMH today from Australia Post mentions the US changes. However, it clarifies that they apply to BUSINESS shipments, not personal gifts.

[Miclop]

Australia has had this for a while. Many of my overseas purchases have had GST added by the sellers.

An article in the SMH today from Australia Post mentions the US changes. However, it clarifies that they apply to BUSINESS shipments, not personal gifts.

"Business shipments" covers anything you've paid money to purchase, basically all online shopping that is shipped internationally.

As to it already existing.
Well, that's not fully the case as Australia still has a "de minimis" threshold of $1000 in a value for parcels arriving from overseas.
Above that value the parcel is subject to customs duty, GST, and an import processing charge.
Below the $1000 value threshold there are no charges at arrival.
The treatment under tax law that the ATO follows is that GST is supposed to be applied and collected at time of sale.
And I suppose later forwarded by the seller as a tax payment to the ATO.

[GoldfishMan]

"Business shipments" covers anything you've paid money to purchase, basically all online shopping that is shipped internationally.

As to it already existing.
Well, that's not fully the case as Australia still has a "de minimis" threshold of $1000 in a value for parcels arriving from overseas.
Above that value the parcel is subject to customs duty, GST, and an import processing charge.
Below the $1000 value threshold there are no charges at arrival.
The treatment under tax law that the ATO follows is that GST is supposed to be applied and collected at time of sale.
And I suppose later forwarded by the seller as a tax payment to the ATO.

That last sentence is a doozy. And I guess the main reason for applying de minimis on GST.
Cost vs benefit analysis is needed to understand why de minimis existed in the first place.

[Miclop]

That last sentence is a doozy. And I guess the main reason for applying de minimis on GST.
Cost vs benefit analysis is needed to understand why de minimis existed in the first place.

Well, let's follow that path.
I buy something for $100, including $10 GST payment.
I then send that to my family in New Zealand, AusPost then charge me the NZ GST value on lodgment for postage.
Should I then be able to claim back the GST paid, or at least the offset amount that I am out of pocket, as I exported the product?

[GoldfishMan]

Well, let's follow that path.
I buy something for $100, including $10 GST payment.
I then send that to my family in New Zealand, AusPost then charge me the NZ GST value on lodgment for postage.
Should I then be able to claim back the GST paid, or at least the offset amount that I am out of pocket, as I exported the product?

Yes, in that case you're being double taxed and the NZ gov will be getting the one-up. That's what they're trying to do aren't they? One-up on the rest of the world using this dirtbag technique. Same goes for Trump and the US.

Anyway, why would you value the parcel at $100? It's your item, you get to value it however you like regardless of how much you paid for it. It's not an insurance valuation, you get no benefit from valuing it higher.

[Miclop]

Yes, in that case you're being double taxed and the NZ gov will be getting the one-up. That's what they're trying to do aren't they? One-up on the rest of the world using this dirtbag technique. Same goes for Trump and the US.

Anyway, why would you value the parcel at $100? It's your item, you get to value it however you like regardless of how much you paid for it. It's not an insurance valuation, you get no benefit from valuing it higher.

If you don't declare the value correctly, then you don't get the correct insurance recoupment when the NZ postie swipes it...