President Donald Trump formally enacted tariffs against China earlier this week. He did so after suspending both proposed Canadian and Mexican tariffs by another month in order to give the countries time to work out a deal with the U.S. In the process, Trump decided to move along with tariffs against China and not allow a monthlong pause.
Now, as the tariffs against China go into effect, shippers and companies worldwide are asking a lot of questions, wondering how the tariffs will affect global trade and shipping.
U.S. shipping companies are taking notice and warning of disruption.
Almost immediately after the tariffs against China went into effect, the U.S. Postal Service made headlines with a ban on accepting packages from China or Hong Kong. The ban targeted all shipments from those countries. After pushback, concern, and questions about how the ban would affect global trade between the U.S. and China, as well as thousands of drop shipping and other companies, it was quickly reversed by Wednesday evening. Despite reversing the ban, the U.S. Postal Service has put all parties on alert: be prepared for disruptions in normal shipping operations and additional costs as tariffs are passed on to the companies and shippers involved in shipments from China.
Shippers have begun to pay import taxes and duties, as well as additional handling charges associated with shipping goods subject to tariffs. After all, there are additional steps all parties need to take in order to comply – and that increases processing time and costs.
The ‘de minimis’ exemption: How it’s affected by Trump’s China tariffs
As expected, the tariffs on China generated headlines, but one component of the new executive orders which imposed the tariffs was featured: the ‘de minimis’ exemption. Prior to the imposing of the tariffs, this allowed all goods shipped valued under $800 to be shipped without any duties/tariffs/other fees.
The action to remove the ‘de minimis exemption’ is significant and will likely have big consequences for the shipping of goods from China to the U.S. Essentially, with the exemption removed, there will be no more duty-free goods for smaller-value shipments. These shipments are now subject to the same tariffs as any other shipment from China: a 10 percent tariff and associated taxes.
Another result of the removal of the exemption will be more time, energy, and costs passed on to shippers and other parties as a result of having to further process these shipments, which were previously “fast-tracked” through customs.
How other shipping carriers have responded to the new China tariffs
DHL, which handles many global shipments and air freight, offered some clarity this week when it began charging shippers import duties and associated handling costs. Shipping with DHL from China immediately became more costly and time-consuming, which is likely to see some shippers try and find alternative carriers to ship their goods, especially on larger shipments.
UPS warned of delays as a result of the new tariffs and associated processing rules but stopped short of offering clarity on fees. Additionally, while issuing its warning, UPS noted that it could not guarantee items would be shipped within the “Service Guarantee” from China.
For the moment, shipping carriers are all in wait-and-see mode, and for good reason. Just as the Canadian and Mexican tariffs were postponed a month, the China tariffs could be suspended or modified at any time with the stroke of a pen by President Trump. So, carriers are reluctant to outline specific policies without more clarity on how long this disruption will last.
At MoreThanShipping.com, we will continue to keep you abreast of all developments with tariffs against China and any other trade policies as they are enacted.
