Tariffs, Customs, Duty Etc.

[brill27mcb]

Thought we might now need a topic on the impact of tariffs, and also thought similar international commerce issues like customs, duty, etc. would also fit in here. I logged in expecting to see info and reactions on the recently announced U.S. tariffs, and was surprised to see none yet.

[bill937ca]

As I understand it, its 34% from Japan on items to US addresses.  I see this as a backdoor 10% or so sales tax on all items entering the US. Kind of like when postal rates go up international rates go up more because there is no push back from local voters. But I don't think that logic works here. By the way US dollar dropped today so those of you using it will have to pay more and more and more. Might be cheaper to move to Canada.  😁

Edited 23 hours ago by bill937ca

[cteno4]

Yes this will ripple into all our lives in one way or another with the hobby. 

 

Please lets keep the discussion to the facts of what tariffs go in place where that affect our hobby and please dont let it drift into a political discussion of why they are being done, if they will or will not work.

 

Here in the US it will be hitting most of the model train manufactures I expect as most production is done in china and Kato in Japan.

 

For most of us that buy directly from Japan and China in the US are not hit with an individual duty currently, but there has been rumblings of duties being imposed by eliminating the de minimus exemption we currently enjoy. But we don’t currently have a system to collect duty for individuals, so that would be a total mess. And with postal service cuts it would be an absolute nightmare. Im guessing they could try to impose a federal individual duty into the overseas state sales tax system as well and try to collect it that way from the exporters like sales tax is now.

 

jeff

[bill937ca]

That might be enough for overseas dealers to suspend shipments to the US.  YIKES!!!! We see what happens.

 

They forget much of the overseas trade is actually done on on US platforms. Microsoft, Apple, Amazon, eBay, PayPal, Visa, Master Card etc.

Edited 23 hours ago by bill937ca

[cteno4]

Currently the de minimus exemption is still in effect as all I have seen and only changes are being proposed thru slow customs bureaucratic action. But it’s unclear if this will have the press and impact that the big import duties do and be worth the trouble. It is disturbing that one excuse for elimination all the de minimus exemptions is security as most all the illicit goods attempting to be shipped into the US come in de minimus except packages. 

 

We shall see where it goes. Im not seeing our customs wanting to deal with the paperwork to deal with duties on the current exempt stuff and why I would suspect they just try to collect thru the state sales tax system with an additional tax there. This shouldn’t then hurt importers and and easy way for the US to get the tax paid off shore and no increased costs here. Im sure if there are costs for the duty collection they will be added on as fees to boot though.

 

jeff

[Dillon]

It is an interesting time...

[cteno4]

That is an old chinese curse!

 

jeff

[UnfinishedKit]

I saw a slightly faceatious comment on LinkedIn inviting Chinese companies to come a set up manufacturing in Australia to take advantage of our rather preferential 10% tariff. 
 

I’m not saying that you should have your trains posted to Oz and then to the US, however I think informal and formal creative solutions are going to emerge pretty quickly. 

[Lessigen]

I've been following Rapido Trains' handling of the tariffs fairly closely as they are local to me and afaik are North America's only international model train manufacturer. They basically had to upend their logistics to have a dedicated US warehouse to minimize tariffs for incoming orders destined for the US (i.e. primarily those with US roads), which is an interesting application. Basically mitigates the tariffs from China at the cost of having to charge state-level sales tax. They have a video on their YT channel where Jason (the owner) goes over the logistics and challenges they have to go through as a result of these tariffs.

 

 

Edited 19 hours ago by Lessigen

[cteno4]

So de minimus exemption is now slated to end May 2 for China and Hong Kong. I’ve not seen anything about other countries as China is the 800lb gorilla in the de minimus exemption and a huge political target, but the rest of the world may be sucked into it as well. It’s sounding like customs will be handling the duty on postal shipping but not clear how that will pan out for practical payment, but for sure will greatly increase the time needed for customs clearance for small packages. Carriers like UPS and FedEx look to be handling the duty payments on their packages. The de minimus exclusion was actually called out for removal in February but was rescinded due to customs not being ready to handle dealing with all the small packages that would need duty payment and processing. 
 

jeff

[bill937ca]

We now know how the tariffs we calculated. The more you buy the higher the tariff will be.

 

https://www.cbc.ca/player/play/video/9.6711188

Edited 13 hours ago by bill937ca

[disturbman]

8 hours ago, bill937ca said:

That might be enough for overseas dealers to suspend shipments to the US.  YIKES!!!! We see what happens.

Why? Exports always need to have a content and value declaration. This is what is/will be used to calculate the tariffs to be paid. Shouldn't change a thing for dealers.

What could happen is that certain shipping methods might close off temporarily if the shippers (let's say USPS) can't adapt in time to start counting and collecting duties on all foreign shipments. You could also expect a certain amount of chaos at the beginning.

[Tony Galiani]

Phew! - for now - I have a bass on its way from Japan but looks like I will be okay for customs at this point.  When I first read this thread I thought I would need to do a rush order for a few items from Japan but I guess I can hold off for now.  Don't really "need" anything but there are some items I would like to have.

Tony

[Kingmeow]

I was about to start a thread like this only for the selfishness of "What will happen to my Plaza Japan or Hobby Search orders to the US?" bewilderment.

 

9 hours ago, cteno4 said:

So de minimus exemption is now slated to end May 2 for China and Hong Kong. I’ve not seen anything about other countries as China is the 800lb gorilla in the de minimus exemption and a huge political target, but the rest of the world may be sucked into it as well. 

 

Jeff, where did you find this info?  Just want to read more into it and not doubting your statement.  Hopefully Japan won't be dragged into it!

 

For individuals, they may set up a "collection system" like they do now at the end of your income tax filing where they ask you if you bought any out of state merchandise and didn't pay taxes on?  It's a Scout's Honor system but it checks the box for the bureaucrats that a system is in place.  And we all know how people will answer that question!

 

Another thought about the de minimus excemption.  If there is an end to this, will it also apply to international travel?  Instead of mail order, if I walk in with $600 worth of trains (like I did last time 🤑🤑🤑🤑) coming from Japan, will there still be an $800 allowance at the airport?  May have to get bigger bags for the Fall.  🤣

[Kingmeow]

22 minutes ago, Tony Galiani said:

Phew! - for now - I have a bass on its way from Japan but looks like I will be okay for customs at this point.  When I first read this thread I thought I would need to do a rush order for a few items from Japan but I guess I can hold off for now.  Don't really "need" anything but there are some items I would like to have.

Tony

 

Tony, how does one ship a big and fragile item like a bass from Japan to US?  I can't fathom the cost of shipping alone not even thinking about the insurance!  😲

 

I cringe at the little N-Scale stuff that I buy from Plaza!  🙂

[Tony Galiani]

@Kingmeow - There are actually a couple of guys over there who ship all over the world and who have 5 star satisfaction ratings.  What they typically do is wrap the bass in thin foam padding, put it in its case or gig bag, wrap that with padding, put the whole thing in a bass sized shipping box which is then filled with foam peanuts or similar.  I have had several shipped over - as carrying them on the plane is not typically allowed any more and I wouldn't trust the baggage handlers with something like that - and they have all arrived in great shape.

Shipping runs US$160/180 or thereabouts.  In this particular case, the shipping was "free" though I could have purchased a bass for from other dealers for less plus shipping and it would have ended up in the same ballpark price wise.

It may seem a bit crazy but  I wanted a Made In Japan bass as the particular brand has a super rep for sound and quality.  I do not have many basses but the ones I have are either from the USA (from a small boutique manufacturer) or from Japan.

Ciao,

Tony

 

PS - If you want to order something to really cringe about, try ordering from Suruga-Ya!  Their free shipping deals can be great but their packing is haphazard at best.

[EB421]

13 hours ago, cteno4 said:

It’s sounding like customs will be handling the duty on postal shipping but not clear how that will pan out for practical payment, but for sure will greatly increase the time needed for customs clearance for small packages. Carriers like UPS and FedEx look to be handling the duty payments on their packages.

 

In the UK, trusted companies can arrange to pre-pay tarriffs - eBay GPP works this way.

 

Otherwise, Customs surveys the charges, passes the number onto the delivering courier (UPS, FedEx, Royal Mail, Parcelforce, etc) who then levy the charge on the customer plus a $10 processing fee and passes it back to the government.

[cteno4]

@Kingmeow the newest exec order on de minimis has been around the press for the last couple of days but all pretty much restating this whitehouse statement from Wednesday’s exec order. 

 

https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-closes-de-minimis-exemptions-to-combat-chinas-role-in-americas-synthetic-opioid-crisis/

 

What is unclear on this is the 30% or $25 [later$50] per item they dont say how that is decided, which ever is more or less or their choice? Huge difference. I had enough digging around on this stuff to try to pull 

 

this has been kicking around since January with us customs, got exec action in feb but was pulled quickly when postal service and customs said they needed time to figure out how to implement it. In most all this stuff its china that is being targeted with their massive amount of de minimus sales with Temu, aliexpress, SHEIN, etc. They have not really said directly in everything I looked at what is going to happen in general with de minimis for other countries unfortunately. Next milestone is the may 2 removal of de minimis for china and Hong Kong and application of the new tariff rates.

 

https://www.cbp.gov/newsroom/national-media-release/cbp-proposes-new-rule-strengthen-enforcement-and-limit-duty

 

In scanning the actual executive order it did not appear it was just china that de minimis was being eliminated, but i gave up trying to go thru it as its a nasty loop of stuff going on in the order.

 

I think @disturbman is right, there will be chaos for a while and USPS will be the worst as its just not set up in any way to collect duty or deal with it with customs on this scale at all. Hopefully it will be some customs web system where duty can be paid online and the package released for shippment, but that wasn’t handle them all and USPS is not in good shape in general and a huge ship to turn at all and facing a lot of cuts, so it will be chaos. FedEx, DHL, and UPS are set up for duty but im sure only do it on a small fraction of US inbound private imports, so it will probably slow the system up as they adapt to the volume. Express services dont like slow ups, their systems are tuned to keeping the packages moving and not stopping, but now things will have to stop for a bit while duty is assessed, applied, and paid. So even those carriers are probably going to experience slow ups and some chaos. But i dont see this being a reason for japanese exporters to stop selling to the US. Most of the rest of the world had a duty assessed on imports, so this is nothing new. The US was just easy as customs was perfunctory for most US personal imports. It will mean the US will become like most countries where the customs step has a bit of an uncertainty to it now and it will definitely be slower. 

 

Political pressure to close the de minimus exclusion loop hole has been building for a while. Part of that started when the State sales tax system went in a couple of years ago. We enjoyed a long period of very easy and no fee importing of our personal hobby stuff, and that looks to be closing down here, how much and if its permanent we shall see.

 

I still hope they could just have this applied with the state tax system at the seller, but there is an exclusion loop hole there on volume. But it would be a simple way to get it done up front and costs known at ordering and since the process already is happening for the sales taxes it would be very effecient to just add the US tariff there. But that’s a bit too logical for situations like this.

 

jeff

[cteno4]

3 minutes ago, EB421 said:

In the UK, trusted companies can arrange to pre-pay tarriffs - eBay GPP works this way.

 

Otherwise, Customs surveys the charges, passes the number onto the delivering courier (UPS, FedEx, Royal Mail, Parcelforce, etc) who then levy the charge on the customer plus a $10 processing fee and passes it back to the government.

 

The issue here is we just dont have this set up at all for small personal packages. Courier services do but its not set up to handle the scale as only packages over the $800 de minimis exclusion that usually were charged any duty [and for many countries we didnt have any duties on many hobby items] so this is going to stress their systems. 

 

We do have different state sales taxes that starting a couple of years ago any exporter [over certain volume] shipping packages in even under the de minimis duty exclusion had to charge the appropriate state sales taxes and pay that to the state quarterly [its done thru a single collection system that divides it all up to the states appropriately so the exporter does not have to deal with each state individually if they charge a sales tax]. Implementation of this actually went pretty smoothly with the big main exporters of japanese model trains. The little guys that only shipped some now and then could slip under the volume limit as well if they wanted to. Of course adding a federal duty to this should be relatively simple and straying forward [pay both state sales taxes and federal duty at the sale] but i doubt that will happen.

 

The US customs service only really scans the de minimis for contraband as none of it had duty attached, so they have no system in place to do high volumes of these small, low value packages for duty. And the volume is has really grown huge with chinese sellers doing a ton of small de mimimis sales, so just having to deal with this all of a sudden is a huge thing to undertake and just going to be massive chaos which will slow the process up a lot. 

 

Sadly we are also not in a consumer friendly situation now so i fear the fees for processing and paying will be high and there will be no gov over site of it and they will actually like higher fees as its just another penalties for importing something.

 

jeff

[Kingmeow]

Interesting Jeff.  I skimmed the links you provided above.  It seems that the focus, so far, is narrowed and targeted at the Temus, AliExpresses and the like.  Fingers crossed that it won't expand to ALL shipments from anywhere in the world.

 

One thing I noticed is that there seems to be no mention of goods purchased abroad and personally brought back into the US (e.g., vacation).  This method of "importing" is far far less voluminous than doing it via mail.  If that's the case, might need more trips to Japan!  😁

Edited 2 hours ago by Kingmeow

[bill937ca]

DHL is set up for collecting duty, sales tax or whatever. Plus a service charge for their efforts too.

[Section31]

22 hours ago, bill937ca said:

That might be enough for overseas dealers to suspend shipments to the US.  YIKES!!!! We see what happens.

 

They forget much of the overseas trade is actually done on on US platforms. Microsoft, Apple, Amazon, eBay, PayPal, Visa, Master Card etc.

 

My question is are the canadian resellers going through us inventory/supply chains or are they actually importing through the direct manufacturer supply chain with direct shipment to Canada. Prices to Canada are over the place and the savings are such it is cheaper to import from Europe or Asia instead of buying from Canadian Sellers.

 

Europe Fedex Trains to Canada is only 5% GST (fee is waived as i bill to my fedex account). Trains from Asia are rarely taxed and if are pretty low since Asia under declares train stuff in general. Though i gave up on ordering from Japan to be honest, too many export restrictions.

Edited 52 minutes ago by Section31

[Section31]

1 hour ago, Kingmeow said:

Interesting Jeff.  I skimmed the links you provided above.  It seems that the focus, so far, is narrowed and targeted at the Temus, AliExpresses and the like.  Fingers crossed that it won't expand to ALL shipments from anywhere in the world.

 

One thing I noticed is that there seems to be no mention of goods purchased abroad and personally brought back into the US (e.g., vacation).  This method of "importing" is far far less voluminous than doing it via mail.  If that's the case, might need more trips to Japan!  😁

 

I suspect that part will be fixed over time. I am buying from Khaho HK shipped to Canada but i can always get it picked up from Khaho retail and stored in the Hong Kong flat if needed. Then await me or someone else to bring back.  It's something i am considering for other things effected by the tariff (called the old grey market). 

Edited 53 minutes ago by Section31

[cteno4]

1 hour ago, bill937ca said:

DHL is set up for collecting duty, sales tax or whatever. Plus a service charge for their efforts too.

 

So is fedex and UPS, its just they dont have to for the vast majority of small parcels coming in to the US. It will cause a headache for them ramping up the service to a whole population of folks that have never had to deal with that. It will backup their systems as well as currently only delay they may see is in customs scans for contraband. Express curriers are in the mode of keeping packages flowing fast, having a pile of packages that now have to await duty payments will be a new loop for them here in the US. It was really rare anything had a duty on it even if in excess of de minimus, and that was usually big business imports, not small package shipments. Im sure we are going to see some good service charges hit us as well.

 

The focus appears to be on china right now, but in reading the executive order there did not seem to be anything singled out so im guessing its sort of on a discretionary basis on who to crack down on when.

 

In the last 6-12 months a lot of cracks have been showing in the usps and also express carriers. Things with ups and fedex now go into some strange spirals for a number of days then finally come out and continue. It may be shippers fleeing usps and overloading the non express shipping of fedex and ups. But it’s worrisome that it’s getting spotty. Actually had letters go missing [we get an email every morning showing scans of the letters coming that day], some show up a week later, some went poof and some are brought over by neighbors from mis delivery. But theis is all pretty new as in the past I never had issues with lost stuff in usps. My wife is dealing with an ups box she sent that is stuck in Pennsylvania going around and around for over 5 days now all ups says is something is wrong, file a complaint…

 

jeff