WASHINGTON: The United States yesterday ended tariff exemptions on small packages entering the country from abroad, in a move that has sparked concern among small businesses and warnings of consumer price hikes.
President Donald Trump’s administration cited the use of lowvalue shipments to evade tariffs and smuggle drugs in ending duty-free treatment for parcels valued at or under $800 (about RM3,381).
Instead, packages will either be subject to the tariff level applicable to their country of origin, or face a specific duty ranging from $80 (about RM339) to $200 (about RM845) per item.
But exclusions for personal some personal items and gifts remain.
Trump’s trade adviser Peter Navarro told reporters that closing this “loophole” helps restrict the flow of “narcotics and other dangerous and prohibited items” while bringing fresh tariff revenues.
But the monthlong lead time Trump’s order provided has sparked a frenzy.
Postal services, including in France, Germany, Italy, India, Australia and Japan, earlier said most US-bound packages would no longer be accepted.
The UK’s Royal Mail, which took a similar step, announced new services Thursday for customers to continue sending goods to the United States.
On Tuesday, the United Nations’ Universal Postal Union said 25 member countries’ postal operators had suspended outbound postal services to the country.
“Foreign post offices need to get their act together when it comes to monitoring and policing the use of international mail for smuggling and tariff evasion purposes,” Navarro added Thursday.
US officials maintain that just five percent of duty-free small package shipments arrived via the postal network, while most went through express couriers.
Yet, the impending change has brought confusion and concern to small businesses.
UK retailer Liz Nieburg told AFP she had stopped shipping products to US customers while the Royal Mail worked out a system to honor the changes.
US buyers form about 20 per cent of sales at her online business SocksFox, which sells socks, undergarments and sleepwear.
Cornell University professor Li Chen warned that it takes time for postal services to establish systems for duty collection: “It’s not like there’s a switch you can turn on and turn off.”
“On the consumer side, there will be potential delays, because now all the parcels have to clear customs,” Chen added. Prices may also rise if businesses pass on the tariffs.
He expects the impact on small businesses to be “much greater”, as larger firms can absorb shocks.
These include businesses like Chinese-founded consumer platforms Shein and Temu, which were hit when Washington ended the exemption for China-origin products this year.
They might have to raise costs, Chen said, but they are not fully dependent on US consumers. – AFP
