Biden tackles trade loophole used by cheap Chinese e-tailers

The Biden administration announced on Friday it was cracking down on a tax loophole that has enabled Chinese web souks like Shein and Temu to thrive. The de minimis exemption is a US trade provision that allows low-value goods — those valued at $800 or less — to be imported without incurring duties or taxes. That threshold was …

[gecho]

I wish!

In Canada the import threshold for taxes is $40, and $150 for duty, usually accompanied with a minimum $10 processing fee. Duty can be a surprisingly big hit, like 25% for clothing and they charge consumers on the retail value declared which is probably double / triple what a wholesale importer pays.

[Neil Barnes]

Re: I wish!

Similarly in Europe: I just purchased a few electronics parts I needed urgently from China (total under three bucks) and paid thirty bucks for express delivery. Fair enough, my hurry... and it worked; they were here over a weekend. But when they got here there was another six euros of duties (for some reason, I think they charge the duty on the postage as well) and then as a courtesy detail the shipper charged be fifteen euros handling fee...

The problem is not the tax/duties; we should not be avoiding/evading those, particularly if we want to encourage a local supply chain. The problem is the collection of those duties. At the very least I should be able to pay the authorities direct, rather than it being another income stream for the shippers. When stuff arrives by post from out of the country, it sometimes comes with a demand for duties from the postman - who can only accept cash. This does not seem to be an excessively difficult issue to resolve.

[Spazturtle]

Re: I wish!

If the shipper has already paid the duty (which is what the handling fee is for) then you don't need to worry about anything, your debt to the taxman is clear.

And since you never signed a contract with the shipper you have no obligation to reimburse them.

[John Brown (no body)]

Re: I wish!

"And since you never signed a contract with the shipper you have no obligation to reimburse them."

Normally, they won't hand over the package unless you do. Essentially, extortion.

[Neil Barnes]

Re: I wish!

There is that small inconvenience.

But then, taxation is and always has been demanding money with menaces...

[Ianab]

Scenario in NZ is somewhat similar. Everything imported or sold in NZ attracts a 12.5% GST (similar to VAT in the UK). Now if you import $1,000 of widgets from China, you have to pay the GST before it's cleared. But there is naturally a threshold where the tax isn't worth collecting, and most Aliexpress / Temu packets fell in that category, so no tax was paid on them. This means the stuff imported by local shops was taxed, but stuff bought from a Chinese (or any other foreign web page) wasn't. Temu gets an unfair advantage over local retailers, and the Govt misses out on tax revenue.

Solution was that if an overseas company gets over a certain threshold of sales to NZ, (maybe $100,000?) then they have to register with the NZ Tax Dept, and collect that tax at time of sale. Now some small time web site that only does the occasional small order to NZ still slips though the cracks, but that's a legit loophole. The BIG online stores that are getting thousands of orders a day basically comply, and collect the tax at "checkout".

I guess the "stick" is that if Temu doesn't play the game, then their parcels get held up in Customs until they clear the due taxes.

Temu might not WANT to do this with the US market, because adding the tax makes their widgets and assorted tat more expensive to buy. But there is zero reason they can't. They already have this sort of function enabled for NZ clients.

[gryphon]

Very similar for European VAT I think.

[JoAnywhere]

One key point.. GST in NZ is 15%. The rest of what you've said about importing into NZ is spot on. That being said, it's still vastly cheaper for me to buy off AliExpress (as long as I know what I'm doing WRT the product I'm purchasing) than to go through a New Zealand retailer with the same product.

As someone posted recently on another story, sorting out the Universal Postal Union rules would change things significantly as well (I had no idea about this until I read up on it a day or two back).

China is designated a poor nation under the UPU and as such can ship products for below the actual shipping cost either to them or to the receiving postal service. The receiving postal service then ends up funding the cost of delivery.

[Alan Brown]

UPU

Whilst there's much gnashing of teeth about UPU, only about 10% of what I order from Aliexpress comes via postal services (and that tends to be the $1-2 items)

The vast majority are coming via parcel carriers and delivered by the likes of Hermes or Yodel (with all the bad things those methods imply)

[Ianab]

Re: UPU

From what I've observed they are air freighted in bulk to NZ, with local courier labels already printed on them. Obviously the pallet of packages must cost to airfreight, but it would spread over 100s of individual orders, and probably on a Chinese airline. Then they would have a "bulk customer" contract with local delivery companies, and pay the cheapest local delivery rate they can negotiate. The "return address" is a warehouse in Auckland. And because the whole pallet is "GST Paid" it clears customs quickly as they don't have to assess individual packages. So with AliExpress at least you can track the "Left China", "Arrived NZ", "Cleared Customs", "Out for Delivery" happening a day or 2 apart.

So end result is the tax is paid, and delivery costs are similar to what a NZ based company would pay. I don't buy a lot, but it's handy to be able to pick up small computer parts that are harder to find locally.

Some small cheap items do come standard post and no tracking, but that's usually things that fit in a padded envelope etc.

[Gene Cash]

Not just taxes

I would hope this means, in return for paying tax, that unsafe trash like the instant-death electronics Big Clive is always pulling apart, is no longer allowed.

[Alan Brown]

Re: Not just taxes

The thing about that trash is that if notified, Chinese authorities usually take action. The hard part is knowing who to contact

The USA consumer protection authorities AND Underwriters Laboratories AND various other agencies have offices in Shenzhen as well as Beijing - and have expressed a willingness to assist safety authorities of any country in dealing with unsafe products

Apparently that's "too hard" for British authorities to deal with. One standout example is the plethora of fake and dangerous UK mains plugs - which could be stopped easily IF the BS1363 organisation sent a single document to UL demonstrating that they have the original copyright on the design and authorising UL to liase with Chinese authorities in getting the fakes permanently removed form the markets (UL works with the CCC on these matters), vs the current sitation where the tooling keeps shifting between shady operators

I was literally told "It's too hard, we can't do that, they're not in the UK"

[codejunky]

Caught by the headline

The headline said Biden did something other than sunning himself on a beach. But then in the body it makes more sense- "The Biden administration".

I dont think Biden has been running things for some time if at all

[Casca]

Re: Caught by the headline

Yes, we know what you "think"

[NantucketClipper]

Re: Caught by the headline

For any of you that "think" that Biden has been doing any decision-making, you obviously have not seen, nor heard him, in the past 4 years. It's quite clear he has has dementia--something I don't wish on anyone. And it's tragic that the US government and media choose to ignore it and provide cover for him.

[A. Coatsworth]

Re: Caught by the headline

And yet the US is not doing (much) worse than in previous years, which shows how much power the president actually wields, and highlights how the elections are little more than bread and circus

[Gary Stewart]

Re: Caught by the headline

Ever heard of Ronald Reagan? Same story, earlier verse.

[NantucketClipper]

Re: Caught by the headline

Not when he was in office. Amazing how people like you fall prey to the left-wing propaganda all the time. Actually, it's not so amazing, since the vast majority of media and online forums lean way to the left. Definition of "left": "We believe government is the solution to our problems." And who said "Government is not the solution to our problems, government IS the problem!"?

[Casca]

Re: Caught by the headline

And another right wing muppet comes along...

[martinusher]

Its not a 'loophole'

Its just a threshold below duties are deemed not worth collecting. Its a bit on the high side compared to other country's thresholds but the general idea is that tying up small shipments in bureaucratic red tape is a good way to stop them. Which is probably what the purpose is -- its all about creative ways to 'hurt China'. Which aren't that creative, won't hurt China and are likely to put a damper on a lot of small businesses in the US. (Forget consumer tat -- its the low cost / fast turnaround prototype PCBs and electronics sub-assemblies I'm interested in.)

All this smacks of weakness but like the man said, this whole sanctions thing has taken on a life of its own.

[Kev99]

This is what happens when the bean counters sell their souls to wall street and their ilk.

[Tron]

This just makes everything more expensive for us.

Sanctions/fees on imported goods always damage the countries that levy them more.

This sort of thing increases inflation and nothing wipes out a regime quite like inflation. Brexit took 25% off Sterling and added to supply costs, turbo-charging inflation. That duly buried the Tories in the UK.