American multinational e-commerce company eBay is situated in San Jose, California. This platform allows users to view or purchase items from the worldwide online marketplaces and other websites. Etsy is also a similar e-commerce company. Their main focus is the sale of vintage or handmade items and craft supplies. Both of these sites have been in existence for quite some time. Both of these sites are used by thousands of people on a daily basis.
A U.S. perspective on e-commerce
Americans shopping for secondhand, vintage or handmade items on platforms like eBay EBAY.O and Etsy ETSY.O face steep customs duties on international purchases next month, potentially hurting trade on those peer-to-peer sites. In a surprise move late on Wednesday, U.S. President Donald Trump ordered the removal of “de minimis” duty-free treatment on parcels under $800 from all countries, starting August 29 – bringing forward a change previously set for July 2027.
De minimis essentially references to something that is too trivial to be considered significant. Within a trade context, a de minimis exemption make provision for low-value packages to be able to enter a country without having to incur duties. The acceleration follows pressure from groups that argue the exemption facilitates fentanyl smuggling and has led to a flood of cheap products entering the U.S. duty-free, undermining U.S. retailers and manufacturers.
A global influence from Etsy and eBay
Trump ended duty-free access for low-value parcels from China and Hong Kong at the start of May, disrupting ecommerce flows for online retailers like Shein and Temu. After asking for feedback on widening the removal of de minimis, some U.S. businesses had spoken out against the policy. “These exemptions are a powerful tool that helps small creators, artisans, and makers participate in and navigate cross-border trade,” Etsy’s global head of public policy and advocacy Jeffrey Zubricki wrote in a submission to Customs and Border Protection in March.
The majority of Etsy’s 5.6 million active sellers and nearly 90 million buyers are in the U.S. Etsy did not immediately respond to a request for comment on Thursday. eBay also urged the customs agency to reconsider, arguing that de minimis gives American consumers access to “a global market to find value at lower prices, particularly for used goods and a unique, collectible inventory that is not available domestically”.
Some interesting changes in the tax system
In a results call on Wednesday, eBay CEO Jamie Iannone flagged the elimination of de minimis outside of China as a potential disruption that may impact revenue. eBay did not immediately respond to a request for comment. American businessman Jamie lannone has not only been the CEO but is also the president of eBay since April 2020.
Goods shipped through the postal system will face one of two tariffs: either an “ad valorem duty” equal to the effective tariff rate of the package’s country of origin or, for six months, a specific tariff of $80 to $200 depending on the country of origin’s tariff rate. It is the latest headache for small businesses grappling with hefty import tariffs imposed by Trump, driving up costs, forcing many to hike prices and fueling concerns that Americans will be paying more for everyday goods.
“The complexity of doing business with the U.S. has gone to levels nobody could have imagined,” said Andrew Wilson, deputy secretary general of the International Chamber of Commerce. The International Chamber of Commerce is regarded as the hardest business organization throughout the world. It represents more than 45 million businesses in more than 170 countries.
Taxes imposed on imported goods allow the government to be able to control some of the volume of trade. It also helps to provide some form of protection on the domestic industries specifically from foreign competition. These custom duties also encourage consumers to support more domestic business and buy locally made products as the prices on the imported goods start to escalate. These types of custom duties also serve as a method of revenue generation.
GCN.com/Reuters