After weeks of to-ing and fro-ing, US President Donald Trump yesterday imposed new 25% tariffs on goods from Mexico and Canada and a new 10% levy on items from China.
However, despite once claiming,‘Tariffs are the greatest thing ever invented’ there is one tariff measure he is now running shy of, says the international delivery expert Parcelhero.
Parcelhero’s Head of Consumer Research, David Jinks, a Member of the Chartered Institute of Logistics and Transport, says: ‘Following last month’s chaotic parcels backlog caused by his temporary suspension of the de minimis threshold for parcels arriving from China, President Trump has fortunately shelved similar plans to impose tariffs on low-value packages arriving from Mexico and Canada.
‘As part of his new tariff regime, Trump had previously announced that he would axe the de minimis threshold on parcels arriving from Mexico and Canada. This would have meant all items valued at under $800 (around £630), which had previously not incurred any duties or taxes upon arrival in the US from Mexico and Canada, were now liable.
‘However, the disruption that ensued after he temporarily tried the same tactic on packages arriving from China last month has clearly caused him to back off from this controversial measure. The logjam resulted in packages from across the world, including the UK, piling up at US Customs facilities.
‘Once bitten, Trump has proved twice shy. On Sunday he amended his tariff orders for both Canada and Mexico. The amendments say that, despite the new 25% general tariffs, the existing duty-free de minimis threshold will still apply on low-value items until “…adequate systems are in place to fully and expeditiously process and collect tariff revenue…” That’s pretty much the same wording as last month’s screeching reversal, when Trump hurriedly signed an order restoring the de minimis threshold for Chinese packages “…until adequate systems are in place to fully and expediently process and collect tariff revenue…”
‘How did Trump arrive at this tariff U-turn? During the first weekend in February, Trump signed orders axing the de minimis threshold on Chinese e-commerce packages. US Customs services were given just over 48 hours’ notice and the result was Customs chaos, a temporary suspension of all US Postal Service (USPS) parcel deliveries from China, more than a million packages reportedly piled up at JFK Airport and some hefty, unexpected bills for US consumers.
‘Customs at New York’s JFK Airport were so backed up that even those goods on which duties had been paid became stuck, according to the US news agency Reuters, while the USPS temporarily stopped accepting any new packages from China and Hong Kong as it sought to adapt to the new requirements.
‘Around 4 million parcels arrive in the US every day and the sudden need to process them differently and collect new duties looks to have overloaded Customs and postal systems. Of course, this logjam also affected e-commerce items arriving from elsewhere, including the UK.
‘American consumers were also caught out by the new tariffs. Reuters reported one online shopper who had placed a $197 order from the Chinese e-commerce company Shein. They were billed an extra $39.07, including $20.76 in import duties, $1.31 in regulatory charges and $17 in duty tax processing. Similar unexpected extra charges on products from Mexico and Canada would not have gone down well with voters who look to Trump to reduce their shopping bills, not increase them.
‘There’s no doubt, however, that Trump plans to cancel the de minimis threshold for low-value packages from China, Mexico and Canada as soon as his Secretary of Commerce confirms systems are in place. The problem for UK e-commerce exporters is that, even if Britain escapes the measure, any resulting backlog and delays will likely have knock-on effects for UK e-commerce shipments to the US. Furthermore, higher spending by US consumers on goods from China, Mexico and Canada means they will have less disposable income to purchase items from UK traders, for example.
‘Trump’s new tariffs on Mexico and Canada are far from being his only planned reforms. Last week’s successful visit to the White House by UK PM Kier Starmer resulted in Trump declaring: “I think we could end up with a real trade deal that… where the tariffs wouldn’t be necessary. We’ll see.” However, this is far from certain and the UK could still end up in Trump’s crosshairs.
‘It’s true that there is virtual trade parity between the UK and US but Trump sees tariffs as a political as well as an economic weapon. Whatever the outcome, we can expect some export and courier market volatility.
