Importing Into The US

The impending arrival of the new US Administration brings a President elect who has a history of applying increased tariffs on imports into the US.   A reoccurring theme from the presidential election campaign was the continual threat to further increase tariffs on imports.

It is worth noting that UK exports to the USA reached £192b in the four quarters to the end of Q1 2024 and the US remains the UK’s second biggest export market.

$800 De minimis limit

Many UK exporters have historically relied on the $800 ‘de minimis’ limit, below which no taxes are paid on imports into the US.  With suggestions that this limit may under review, UK exporters will be watching closely to see if this limit is to be scrapped.

This would have a significant impact on UK e-commerce businesses selling goods into the US as customs duty will need to be paid at the US frontier on all imports, regardless of value.  This would not only mean an increased tax burden on the US consumer but could mean that delivery times are severely disrupted whilst goods clear customs.

Furthermore, importers into the US would need to consider whether the additional tax burden and the requirement to pay duties either on the doorstep or at the local post office, would put customers off altogether.

The $800 allowance has helped to fuel significant growth in many UK e-commerce platforms who sell low-cost goods to US consumers.  In particular, many clothing retailers have benefitted where there continues to be strong demand for UK fashion and the duty on apparel averages 16% on entry into the US.  If the $800 de minimis limit was removed, a garment retailing for $500 would potentially cost the US consumer on average $80 more.

Section 301 tariffs

During President Trump’s last tenure, a number of Section 301 (US Trade Act 1974) tariffs were implemented which imposed tariffs of up to 25% on a range of products imported from China.

These so called “Trump Tax” tariffs are still in place and regardless of a change in leadership, the US has already indicated that Section 301 tariffs will apply to a further range of products imported from China from 1 January 2025 including medical items and high technology components.  It remains to been seen whether the list of affected goods will be increased further.

In addition, President Trump has stated that an additional 10% will be added to the Trump Taxes from his first day in office.

Is China still a viable option?

Whilst China may be the obvious choice for cheap products that can be manufactured in volume, the high US tariffs placed on Chinese origin goods imported into the US may force businesses to reconsider their sourcing options.  The early-stage savings in the supply chain may be eliminated by the addition of 25-35% tariffs at the point of sale into the US market.  Businesses for who the US is a key market should ensure that these tariffs are factored into their supply chain decisions as it may be more economic to source more expensive items originating in other jurisdictions in order to mitigate the Trump Tax impact.

How Can You Plan for change

At AAB Customs, we believe that UK businesses who regularly export goods to the US should plan for potential solutions to ensure that they are not hit with unexpected tax increases or worse, the loss of business in a key market.

Whilst these increased tariffs would still be unavoidable were the US go ahead with the abolition of the $800 limit, AAB Customs do have a range of solutions that can assist UK retailers to lower their overall duty spend into the US.  These solutions would be available both to goods which currently benefit from the €800 limit and those which are already subject to tariffs.

If you are operating an e-commerce platform or simply export goods to the US and as a business avail yourselves of the $800 limit, now may be a good time to explore what options are available to you.

The AAB Customs team is formed from a number of ex-HMRC employees and other professionals from the freight and shipping industry.  The team has extensive experience in the field of customs duty and has helped many businesses reduce their duty bills and increase their compliance profile.  If you would like more information about how AAB Customs can assist your business going forward, please don’t hesitate to get in touch for a conversation.

If you have any questions, please don’t hesitate to get in contact with Alistair Duncan, or your usual AAB contact.

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