DBT issues guidance on low-value shipments to US

As reported by ICAW.

UK businesses now face tariffs on “vast majority” of exports to the US, following Trump’s suspension of de minimis duty-free treatment of low-value goods from abroad.

As UK businesses continue to grapple with critical economic issues around low growth and the cost-of-living crisis, those with trade links to the US now face an additional hurdle.

At the end of July, President Donald Trump signed an Executive Order (EO) suspending so-called de minimis duty-free treatment on low-value goods from foreign countries. Covering goods valued at or below $800 (around £590), the suspension kicks in on 29 August.

Mindful of the likely impacts on UK traders who regularly ship low-value goods to the US, the Department of Business and Trade (DBT) has issued guidance on what the EO means for the business community.

Background

Issued on 30 July, the EO built on several, previous orders that Trump signed between February and April, aiming to tackle “unusual and extraordinary threats, which have their source in whole or substantial part outside the United States”.

In the EO, Trump deemed it necessary and appropriate to suspend duty-free de minimis treatment “on a global basis” to deal with the “emergency”.

Explaining further in a special fact sheet, the White House pointed out that between 2015 and 2024, the volume of de minimis shipments entering the US rose from 134m to more than 1.36bn. On average, it noted, US Customs and Border Protection currently processes more than four million inbound de minimis shipments per day.

The White House added: “The de minimis exemption has been abused, with shippers sending illicit fentanyl and other synthetic opioids, precursors, and paraphernalia into the United States in reliance on the lower security measures applied.”

As a result of the suspension, from 29 August onwards, goods valued under the $800 threshold will be subject to “all applicable duties, taxes, fees, exactions and charges,” regardless of country of origin or method of entry.

In a 1 August press release, Matthew Clark, International Trade Partner at accounting and advisory firm BDO, said: “This will be a bitter blow to many UK businesses that rely on the de minimis duty-free regime to export their goods to the US.”

DBT’s advice

In its guidance, published in late August, DBT stresses that UK businesses will now have to pay tariffs on “the vast majority of exports to the US”.

Depending on the product and its classification, those tariffs will vary and may be based on one or more different schemes. Chief among those are Most Favoured Nation tariffs, linked to the US Harmonized Tariff Schedule, plus charges established under the US International Emergency Economic Powers Act (also known as ‘reciprocal’ tariffs), based on country of origin. The latter are currently set at 10% for goods arriving from the UK.

However, DBT notes, UK businesses may face further tariffs, such as those outlined under Section 232 of the US Trade Expansion Act. It also warns businesses that tariffs can ‘stack’, meaning that multiple layers could apply, resulting in higher costs.

In addition, DBT says, a comprehensive customs process will now apply to all exports to the US. While some data fields on customs forms were previously optional, the information that businesses provide must now be complete and accurate. That includes product descriptions; country of origin details not just for each item, but its component parts (Section 232 tariffs also apply to components, based on country of origin), plus Harmonized System (HS) codes.

DBT points out that your carrier will use the data you provide to calculate additional costs, including tariffs, duties and other customs clearance and administrative charges. Depending on your carrier’s policy, those costs may be Delivered Duty Paid, whereby the seller meets all costs, or Delivery Duty Unpaid, whereby the buyer covers tariffs and custom fees.

The guidance concludes with hyperlinks to further resources from DBT, including its Gateway USA webinar series and Check How to Export Goods tool.

ICAEW Technical Manager, VAT and Customs, Ed Saltmarsh says: “The removal of the $800 (circa £590) duty-free de minimis threshold by the US marks a significant shift for UK businesses exporting low-value goods to the US.”

He adds: “From 29 August, all commercial shipments to the US – including goods that were previously exempt – will be subject to tariffs, customs clearance and additional data requirements. Therefore, UK exporters should immediately prepare for increased costs and potential delays, and check their shipping terms with logistics providers to understand how the changes might affect pricing and delivery.”