Who Pays the Tariff on Imported Goods?

Who Pays the Tariff on Imported Goods? A Guide for US Buyers in a Changing Trade Landscape

The world of international trade can seem complex, especially when tariffs and duties come into play. With recent changes to US trade policy, including the suspension of the de minimis exemption, it’s more important than ever for both individual online shoppers and large wholesale buyers to understand who ultimately bears the cost of these tariffs. This article breaks down the basics and explains how these changes could affect your purchases.

Understanding Tariffs: The Basics

A tariff is essentially a tax imposed on imported goods. Governments use tariffs for various reasons, including protecting domestic industries, generating revenue, and influencing trade relationships. When a product is imported, the importer is generally responsible for paying the tariff to customs officials.

Who Technically Pays the Tariff?

Legally, the importer of record is responsible for paying the tariff. This is the individual or company that owns the goods when they enter the US. For large wholesale shipments, this is typically the business importing the goods for resale. For online purchases from overseas, the lines can be a bit blurrier, but ultimately, the responsibility still falls on the importer.

Who Actually Pays the Tariff?

While the importer is legally responsible, the cost of the tariff is often passed down the supply chain. Here’s how it usually works:

• For Businesses: Businesses importing goods typically factor the tariff cost into their pricing. This means that ultimately, the consumer often pays the tariff, albeit indirectly, through higher prices for the goods they buy.
• For Online Shoppers: If you’re buying directly from an overseas retailer, the price you see might not include the tariff. You might be surprised with a bill from the shipping company or customs for the tariff amount plus handling fees. Some retailers include potential duties and taxes. It’s crucial to check before you buy.
• For Large Wholesale Buyers: Tariffs are a major factor in wholesale pricing. Buyers negotiate prices that take tariffs into account, but the final price they pay reflects the additional cost of importing the goods. It is worth checking what incoterms (international commercial terms) are used in a transaction. It might define clearly who covers shipping and import costs.

The De Minimis Change: A Game Changer (February 4, 2025)

Previously, the US had a “de minimis” exemption, allowing goods valued at $800 or less to enter the country duty-free. This was a significant benefit for online shoppers buying small items from overseas, but that has changed.

Multiple sources indicate that the de minimis $800 exemption was suspended on February 4, 2025. This means that as of February 2025, the exemption is no longer in place. This is a crucial change, as it affects both individual consumers buying small items online and large-scale importers dealing in high volumes of lower-value items.

Navigating the New Landscape:

The suspension of the de minimis exemption has significant ramifications. Consumers can no longer assume that small online purchases will be duty-free. Businesses need to reassess their pricing strategies and factor in potential tariff costs, even for smaller items.

Specific Impacts: China, Canada, and Mexico

While the de minimis suspension applies broadly, the specific impact on duties and tariffs can vary depending on the origin of the goods. This is because existing tariffs, trade agreements, and other trade policies are still in effect.

• China: Goods from China, already subject to existing tariffs, face an additional layer of cost with the removal of the de minimis exemption. This could significantly affect the price of many commonly purchased items.
• Canada and Mexico: New tariffs have also been specifically mentioned with regard to trade with Canada and Mexico. While the $800 de minimis is suspended, it is worth checking with CBP or an expert in international trade as it may have further consequences.
• Other Countries: The removal of the de minimis rules can also have some influence when goods originate from other countries.

Tips for US Buyers:

• Factor in Potential Costs: When shopping online from overseas, remember that the price you see may not be the final price. Factor in potential tariffs, shipping costs, and handling fees. Some retailers now provide these costs.
• Check with the Seller: If you’re unsure about potential tariffs, contact the seller before you make a purchase.
• Stay Informed: Trade policies can change quickly. Stay up-to-date on the latest news and regulations to avoid surprises at the border. Check with CBP or an expert in international trade.
• For Wholesale Buyers: Consult with customs brokers and trade experts to understand how the changes to de minimis and other trade policies could influence your business. Re-evaluate supplier relationships and sourcing strategies accordingly.