In the last decade alone, the world has made a dramatic shift over to technology and the internet. For generations, we were intent on visiting stores and buying products in a face-to-face transaction. In 2017, it is widely expected for CBP to process $2.5 trillion worth of goods in trade. With smartphones, tablets, computers, and everything in between, we can order from sites like Amazon within seconds and the increase in e-commerce shifts is changing the world.
For many, it’s allowing them to work from home as they buy and sell products on eBay or Amazon. For others, it’s keeping them in a delivery job where the industry was previously slowing down thanks to the demise of the ‘catalog’ and mail order business. Elsewhere, it’s also leading to a change in regulations and laws for the shipping industry and the most recent example of this can be found with the change in de minimis value.
De Minimis – Back in 2015, President Barack Obama signed the Trade Facilitation and Trade Enforcement Act. In 2017, this is now in full effect and it means that US Customs and Border Protection has been allowed to increase the minimum value of all shipments by each person per day. Previously, the rule meant that all shipments up to $200 would be free from duties and tax but this has now increased to $800. By raising the de minimis exemption four times over, this is great news for all US residents as well as international companies looking to take part in cross-border trades.
As part of the agreement, there will be no change to the regulation itself but the minimum will increase to $800. From 2016 onwards, the regulation works in the exact same way but this increase in minimum is the first increase seen in over two decades which is a sign of the times and how e-commerce shifts have changed our buying habits.
As before, the CBP will retain the right to ask for formal entry on certain shipments if extra information is required. According to the 2015 end-of-year reports, around 33 million different imports were taken in the US in that year and this led to $46 billion in all fees (including taxes, duties, and various other fees).
US Buying Habits – As mentioned, this change in de minimis (essentially meaning ‘the minimum’ and a term used in a number of industries) is fantastic news for US residents as well as for other countries such as the UK. Every year, around half of all imports come from the UK as we strengthen our cross-border relationships. With competition only increasing in every single industry, we turn towards delivery options and customer service. With no tax on orders of up to $800, this makes products look more attractive and money can be saved.
Canada – Although this change in the US has led to praise for the industry from all around the world, it hasn’t seemed to have moved Canadian Customs’ opinion on their current de minimis rule. Ever since it was set up in the 1980s, the threshold in Canada has been $20; the lowest de minimis regulation in the industrialized world. With this change in the US, it’s likely to put pressure on Canadian Customs in the coming months and years.
However, this is neither here nor there because the US has made the change and the effects of this and the ever-growing e-commerce world are likely to make themselves known in the time ahead.