Inbound postal traffic to the U.S. is down more than 80%, reports MPR News, since the Trump Administration revoked the long-standing “de minimis exemption” for low-value parcels. Eighty-eight postal services from almost that many countries have completely halted these shipments to the U.S., snarling shipping for everything from the car parts you’re waiting for to Amber’s Halloween costume. The Universal Postal Union (UPU) has the full list of services and countries that have suspended service.
The de minimis exemption became law in 1938, making low-value imports exempt from tariffs and duties. The reasoning behind this was that the small amounts of taxes these parcels would bring in weren’t worth the cost of processing them. Originally $1, this value has increased over the years, with the most recent change being to $800 in 2015. This made it simple for shippers around the world to send low-cost items to the U.S.
However, on July 30, a Trump Administration Executive Order suspended the de minimis exception as of August 29. It specifically calls out Canada and Mexico for allegedly failing to stop drugs from coming into the U.S., as well as China for allegedly not stopping the supplies to make such drugs. Apparently, we don’t have tools like X-rays or drug-sniffing dogs at our borders that can detect them before they come flooding into the country. (We do have these tools.) But the order also calls out and includes the entire world for “underlying conditions indicated by the large and persistent annual U.S. goods trade deficits,” because that’s not fair, or something.
We all lose in the end
While the Executive Order claimed that “adequate systems are now in place to fully and expeditiously process and collect duties for articles otherwise eligible for duty-free de minimis treatment on a global basis,” the UPU, which actually manages such trade, says otherwise. Carriers were not set up to handle it themselves, and they had not had time to make arrangements for third parties approved by U.S. Customs and Border Protection to handle it for them, which is typical of the confusion this trade war is causing. The only feasible course of action many of them saw was to halt shipments to the U.S. As a result, shipments were down 81% on Friday, August 29, the day the order took effect, compared to the previous Friday.
The UPU has been scrambling to provide postal agencies with a calculator to help them process these extra fees they are now responsible for collecting. As usual, these costs will be passed on to us, the consumers, because the trade war always seems to come back to bite us. Nothing the Trump Administration has said addresses or even acknowledges the original reason for the de minimis exception, that the cost of collecting such taxes is more than the amount that will be collected. That’s par for the course in an administration that claims to be eliminating government waste while vastly expanding it instead.
