Senators Ron Wyden (D-Or.) and John Thune (R – S.D.) recently introduced the Low Value Shipment Regulatory Modernization Act of 2013, which would raise the de minimis value from $200 to $800. The de minimis is the threshold at which shipments coming into the United States are exempt from tariffs, taxes or customs procedures.
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“If you bring back goods from abroad, you’re allowed up to $800 [worth as tax free],” says Eugene Laney, vice-president of international trade affairs for DHL Express. “But for commercial products, it’s only $200.”
By raising the de minimis level, Laney says that the government’s workload will be reduced and simplified – a benefit that he says is increasingly valuable due to the spending cuts caused by sequestration.
Laney also says an increase to $800 will help domestic manufacturers, as they will be able to import goods and materials more quickly.
Kris Green, the head of strategy and sales for FiftyOne, says that a raised de minimis level is especially important to the ecommerce industry. FiftyOne helps U.S. retailers sell and market their goods internationally.
“Raising the de minimis will make international returns much easier,” says Green, due to the fact that administrative red tape would be eliminated for packages worth $800 or less.
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“When you’re reimporting products into the U.S. for returns, there’s now a formal entry process, duties and taxes, proof you need to submit that the product originated in the U.S. … these are hurdles that make returns more expensive than they need to be,” says Green.
Laney estimates that this process creates a situation for small businesses in which 30-40% of any international transaction goes to transactional costs – not to mention additional stress.
“For small to medium businesses, the CEO is often also the CFO and the compliance officer, wearing three to four hats and having to deal with all of this,” adds Laney.
Green argues facilitating a smoother return process will raise the demand for U.S. goods in an international marketplace. FiftyOne “conducted a survey of international customers who had browsed Black Friday sales but not purchased, and difficulty of return was the top reason given,” he says.
A raised de minimis would also be beneficial for consumers, says Green, as it would make expansion to the United States more attractive for international retailers.