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Post offices around the world are suspending shipping to the U.S. after President Trump ended a rule that meant tariffs did not apply to packages worth less than $800. Darian Woods and Wailin Wong from The Indicator explained why the end of the de minimis exemption is causing mayhem.
DARIAN WOODS, BYLINE: De minimis for China ended in May. The rest of the world, last Friday. The executive order said that goods from most countries would need to have a minimum duty of at least $80 paid at the border for the next six months.
WAILIN WONG, BYLINE: It's worth pausing here to talk about who actually pays the tariff. We've talked about how importing businesses pay tariffs. A big shipment on a freight container, say, has a customs broker. They work with the American recipient to pay the tariff on the border. Well, if you, an everyday American, ordered something directly from a seller overseas, you are the importer. So you are on the hook. The goods only get released from the border once that money is paid.
WOODS: That's how it works in a lot of countries. But Derek Lossing, a logistics expert at Cirrus Global Advisors, says getting every recipient of every small parcel arriving into this country to pay up is going to be a nightmare, especially after the $80 minimum duty ends and it changes to whatever the import country's tariff is.
DEREK LOSSING: Trying to get, you know, hundreds of recipients like yourself to pay $2.60 to a customs broker for the duty that they owe would be extremely difficult. In practicality, it's going to be paid by kind of the shipping company.
WONG: By the overseas postal service, in other words. So rather than be stung by thousands or millions of those owed duties and tariffs, postal services for a lot of shipments to the U.S. decided to just pause them.
WOODS: Derek says a lot of this comes down to IT systems and training.
LOSSING: Each post office around the world, whether that's Australia or Germany or U.K., just does not have the systems in place to collect all the right information.
WONG: It's been quite a mess. And we asked Customs and Border Protection whether it could've done anything more to avoid this.
WOODS: A CBP spokesperson said the agency is coordinating with carriers and trade partners to minimize disruption while securing revenue, strengthening border integrity and delivering long-term benefits to our national and economic security.
WONG: That brings us to the question of who exactly does benefit or lose out from the end of de minimis.
WOODS: A couple of economists tried to quantify exactly how much money households save by buying things online through de minimis shippers like those online stores. Pablo Fajgelbaum at UCLA is one of them. He says he found a strong connection between buying de minimis goods and how wealthy your neighborhood is.
PABLO FAJGELBAUM: Those that spend the most as a share of total income are the poorest.
WOODS: That means low-income ZIP codes will lose out on more, relatively speaking, from the end of de minimis.
FAJGELBAUM: For the poorest ZIP codes, in the order of $40 per person per year.
WONG: There will also be winners from de minimis ending. Derek Lossing says that increase in prices will be good for American retailers.
LOSSING: Small business owners are - and large business owners are winners, right? So there's a lot of small businesses on Main Street America that can't compete with the prices that people are buying things from Temu historically.
WOODS: In the past, that difference in price would've been fairly small. But as American tariffs have shot up over the last decade, the sense that physical stores were playing on an uneven playing field just became too untenable for lawmakers.
WONG: Wailin Wong.
WOODS: Darian Woods, NPR News.
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