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It’s starting.
The de minimis exemption, which allows parcels of goods worth $800 or less to come into the United States duty/tariff free, .
Which means things just got very real for brands who make their stuff in China, and until now had shipped anything under $800 direct to US customers duty/tariff free.
“So what? I never bought any of that cheap junk off anyway.”
Me neither. But here’s how this is now affecting a company like Spier & Mackay, who warehouses their goods in Canada and ships over the border to many of their customers in the United States. It doesn’t matter that an item is not shipping direct from China (like Teemu and Shein’s business model.) (current ), and is sent over the border by a private delivery company like DHL, UPS, or Fed Ex, then it’s now subject to all tariffs, baseline and add-ons depending on category of good and composition…
Pre tariff:
Post tariff:
Pre tariff:
Post tariff:
“Whatever. I don’t shop at Spier. Besides, didn’t the rest of the world’s tariffs “
Sort of. Right now there’s a baseline 10% on the rest of the world until July 9th. That’s when the original so-called “reciprocal tariffs” () are scheduled to go into effect. And while the de minimis exemption remains in place for the rest of the world for now, the executive branch has said they plan on cancelling the exemption for other countries when “” with few exceptions.
If that happens, prices may significantly jump on imported direct to consumer goods such as:
- (scheduled reciprocal tariff: 25%)
- (scheduled reciprocal tariff: 20%)
- * (scheduled reciprocal tariff: 32%)
- *most Swiss watches are over $800, therefore .
“Well I’ll just buy my stuff at brands that don’t ship to my door from over the border. So this de minimis nonsense won’t apply to me.”
A pair of Made in Colombia DTC sneakers
Good call. But the domestic based retailers are of . Yes they in in the hopes that trade deals get done by July 9th. The problem is it usually takes a long time () to do a trade deal. And there are a lot of deals that need to be done. Additionally, now that the de minimis exemption has expired, where do you think all the people who shopped that way are gonna shop? Don’t underestimate that number. According to CNN, “,” whether from China or somewhere else. It’s a supply/demand shock happening in a supremely compressed time frame.
“Meh. I’ll just buy less. We all buy too much crap anyway.”
That’s a noble strategy. And yes, it’s agreed we all consume too much. But in the final quarter of 2024, personal consumption expenditures accounted for almost 68% off GDP. Or as US Bank puts it: ” That’s a huge percentage of the overall economy. So the risk is a severe pullback in that area will slow or destroy growth JUST as tariffs cause price inflation. That’s the literal definition of , which is a particularly . It boxes the Federal Reserve in because they can’t lower interest rates to spur growth, as lower interest rates can inflame inflation. We all learned that in the backwash of the pandemic.
Money. .
The concern is that the expiration of the de minimis exemption is somehow a preview of what’s to come this summer when the 90-day pause expires. Of course the reciprocal tariffs are a different policy, but they all live under the administration’s trade strategy, and they’re being implemented by the same people.
If (and it’s a big if) the proverbial economic “canary in the coal mine” is named De Minimis, then the bird just crapped its feathers and threw-up all over its beak.
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