The Trump administration has just announced that it will scrap the “de minimis” exemption on parcel shipments. This decision has led to major disruptions in postal networks around the world and in global e-commerce supply chains. This policy shift is intended to cut back on cheap imports and bolster American manufacturing. Consequently, a number of these nations have temporarily halted their operations to the United States.
Beginning this Friday, the exemption for shipments worth $800 or less will vanish. The new ruling implies that all such shipments entering the US will now face duties. These are serious times for businesses. This would subject the US to potential tariffs of as much as $200/item based on the country of origin’s tariff rate. Goods from countries that have a tariff rate under 16% will likely incur an $80 charge. Meanwhile, those with rates between 16% and 25% would be hit with $160 in fees. In countries where the average tariff rate is over 25%, the cost can increase to $200 per item.
In reaction to these soon-to-come changes, several countries have already declared a suspension on parcel mailings to the US. Most importantly, India, Thailand, South Korea, and New Zealand have all suspended all services indefinitely. More recently, Japan and Australia have limited the imports of such shipments. At the same time, Taiwan’s Chunghwa Postal Service will halt delivery of small packages to the US beginning next Tuesday.
These halts have caused confusion amongst e-commerce retailers operating in countries such as Australia. According to Laz Smith, international head of fashion retailer The Iconic, the ramifications of this policy reversal are worrying.
“The volatility in decision making, and the volatility of the market, and, quite frankly, the lack of ability of even Australia Post to be able to address these issues in a timely manner, puts us, and all of Australian fashion, in a really precarious position.” – Laz Smith
The tariffs are viewed as a strategic move by the Trump administration to bolster domestic production by making imports more costly. This strategy has upended international logistics supporting shipping into a self-inflicted chaos. Consequently, businesses that depend on cross-border commerce will experience delays and possible lost revenues.
Countries across the globe are currently trying to figure out the best way to adapt their postal systems in light of these disruptions. The situation continues to unfold as businesses and consumers await clearer guidance on how these tariffs will be implemented and what it means for global trade.