Stay in the loop
Subscribe to receive the latest email news and updates from Shippit
Recent shifts in US trade policy could impact retailer operations and result in higher costs, customs delays and unexpected fees for your customers. Here’s what you need to know and how to stay ahead.
What's happened
To date, the Trump administration has enacted significant trade policy shifts, focusing on tariffs, national security investigations, and stricter trade enforcement.
Get up to speed on key events in the timeline below:
What retailers need to be aware of
As part of the broader changes, U.S. President Donald Trump signed an executive order removing the de minimis threshold for all imports shipped from or manufactured in China.
Previously, the de minimis threshold of $800 USD allowed low-value goods to enter the U.S. without incurring duties or taxes, fueling eCommerce growth and simplifying cross-border trade. However, with this threshold removed, all affected imports will now be subject to duties and taxes, aligning the U.S. with markets like Canada and the EU. Shortly after the announcement, Trump temporarily paused the change - effectively buying time for the industry to adapt. But merchants should prepare for the shift and assess their options going forward.
This decision affects Australian retailers whose goods are made in China, even if they are shipped from Australia. An additional 10% tariff on exports to the US and similar tariffs on European Union imports are also under consideration, adding more uncertainty to international trade.
1. Elimination of de minimis for Chinese imports
Previously, the US de minimis threshold of $800 USD allowed low-value goods to enter duty free. With its removal, all goods manufactured in China or Hong Kong are now subject to duties and taxes when they land in the United States. This could be higher costs for Australian retailers that manufacture in China and sell to US customers. For example, a US$100 retail-priced clothing item that was duty-free before could now attract around US$35 in duties. Alternatively, retailers could import stock into the US and pay duty on the cost price instead of the retail price, but this requires holding inventory in the United States, adding complexity.
2. Tariffs on Canada, Mexico, and the EU
The US has announced a 25% tariff on goods entering from Canada and Mexico, with similar tariffs being considered for EU imports. If implemented, these measures could trigger retaliatory tariffs and disrupt global trade routes. Retailers relying on cross-border manufacturing or supply chains with Canada, Mexico, or the EU should reassess sourcing strategies to manage potential cost increases.
What you need to consider now
In the short-term, retailers need to decide how they will handle these additional duties and taxes. The key options include:
- Continue shipping Delivery Duty Unpaid (DDU): This means customers will bear the cost of duties and taxes upon delivery. While this may maintain lower upfront costs for retailers, it risks refunds, returns, and customer dissatisfaction as U.S. consumers adjust to the new fees.
- Shift to Delivery Duty Paid (DDP): Retailers can pre-pay duties and taxes so that shipments clear customs in transit and reach consumers seamlessly. This ensures a smoother delivery experience but requires strategic adjustments. Merchants can either display duty and tax calculations at checkout or absorb the costs within product pricing or shipping charges. In the short-term, a weak Australian dollar may also soften pricing changes and increase international competitiveness for Australian retailers.
How to ship Delivery Duty Paid (DDP)
Switching to Delivery Duty Paid (DDP) shipping protects your delivery experience by eliminating unexpected fees that could lead to upset customers, refunds, and returns.
1. Accurate customs classification
In order to get an accurate calculation of duties and taxes you will need to store product categories or Harmonised System (HS) codes in your product catalogue or eCommerce store. This is because HS codes are used to help customs identify the type of items contained within a shipment. Every item should have an HS Code, and the exact code for a specific item will be based on several factors including material composition, physical state (solid, liquid, and gas), use, and whether it is a finished or unfinished item.
Where can I find HS Codes?
It is best to visit your local government website to find the correct HS Codes for your items. Here are some common country links:
- New Zealand - Tariff Finder
- United Kingdom - Trade Tariff Lookup
- United States - Schedule B Search Engine
2. Automated duty and taxes calculation
Once you have the right information on the product you're shipping, you can use digital tools to accurately calculate the duties and taxes a package will incur, well before it reaches customs. Not only does this reduce bill shock, it also arms you with the information you need to make strategic pricing adjustments and gives you the option to pre-pay duties and taxes, or surface them at checkout for customers (rather than at the point of customs clearance). Using digital tools for duty calculations can also ensure you are always up-to-date with the latest tariff changes.
At Shippit, we partner with tools like Zonos, which allow us to provide a complete breakdown of duties, taxes, and fees based on your product classification. Retailers can pass on their HS codes and product details to the Shippit platform to get an accurate calculation of the sum of duties, taxes, and additional fees from customs, brokers, or the shipping carrier. What's even better is that this service comes with a Landed Cost Guarantee, which ensures you and your customers never pay more than the initial charge.
3. Automated shipping decisions
In order to scale your international expansion, granular and agile control over your international delivery options is key, so you can adapt to new regions and trade policy changes.
A delivery platform like Shippit offers out-of-the-box rules that can automate tax-related shipping decisions, reducing manual effort, errors, and compliance risks. Here are some tactical examples of how you can leverage our automated delivery allocation:
Automate tax handling by destination
- If your products are primarily sourced from China and you are shipping to the U.S., you can auto-apply DDP for all orders that are being delivered to the U.S., in preparation for the elimination of de minimis for Chinese imports.
- For deliveries to other regions, set up an automatic selection of DDP (delivery duty paid) for high-value orders to prevent unexpected customs charges for customers.
Route shipments based on tax efficiency
- You can automatically direct orders to a specific delivery provider that offers the best tax and duty rates.
