US De Minimis Exemption Leaving May 2nd
Hello!
If you live in the US, read on. If you don’t live in the US, the info in this blog will not apply to you, but feel free to be curious!
tl;dr
- Order before the sale ends on April 28th to ensure your order crosses the border tariff-free.
- Carmico goods are manufactured in China, so after May 2nd, they will be subject to tariffs levied against China. We don't know what the tariff rate will be as it changes from day to day.
- We’re actively working on sourcing production in other countries, which will reduce fees for our customers, but it takes time.
- We’re not sure when Carmico will be able to send to the US tariff-free or if things will return to “normal”. This is the absolute best time to purchase from us if you've been eyeing in-stock items.
- You, our American friends, are the reason Carmico exists today. The US is the majority of our market, so the threat of losing you is impossible to bear.
- As it stands, this trade war threatens Carmico’s existence. If you love our stuff, please support us as much as you can. Buy the sale, tell your friends inside and outside the US about us, and follow along with us as we navigate the ever-changing trade landscape.
What’s happening?
Trump is in a pissing contest with every political leader in the world right now. He’s using strong-arm tactics to bully countries into giving him trade deals that are favourable to the US. The US has historically been an easily accessible market with some tariffs on goods to preserve specific industries. The issue is, he’s issuing sweeping tariffs across all industries, even ones that can’t survive in the US.
The goal of these tariffs is to bring manufacturing back to the US, but there are few initiatives beyond “just tariffs” that will support returning industries in the long term. Ultimately, it severely impacts international trade, an important asset Carmico heavily relies on.
The apparel industry is one of the industries that can barely survive in the US and the ones that do continue to outsource production to countries that are better suited to the industry. Hanes is a prime example. They started in the US but now outsource the majority of their production to Central America.
This is what makes everything so much more difficult for business owners, small, medium, and large, because uncertainty is the worst thing for business.
What is certain, though, is that the US wants to stop the de minimis exemption. Trump claims it's to curb drug trafficking, but it’s most likely to hurt international sellers with large markets in the US. Carmico is one of them.
The de minimis exemption (Section 321)
Any order placed before May 2nd is tariff-free. You will not have to pay any customs fees.
Until May 2nd, 2025, all orders are still exempt from tariffs. You’ve probably read that there is a 145% tax on Chinese goods as of the time this blog was published. You do not have to pay that as long as your order is valued at less than $800 USD.
The de minimis exemption has been in place since 1938 and has been used to reduce bureaucracy and unnecessary costs for importers. Over the last 90ish years, it has evolved to the point that it is today, where any shipment imported by you, the customer, that is valued less than $800, is exempt of tariffs, duties, customs fees, brokerage fees, etc. It has served the e-commerce industry well. So, naturally, its absence threatens the industry. Carmico included.
After May 2nd, you will have to pay tariffs based on the product’s country of origin. Since our products are made in China, after May 2nd, they will be subject to whatever the current tariff rate is at the time of processing.
We’re hoping, praying, manifesting that trade negotiations are favourable before May 2nd so that our US customers are minimally affected. Read more about what we’re doing to reduce the potential burden below.
If you want further reading to understand the full impact of the de minimis exemption, this post from the Financial Times explains it well.
What we’re trying to do
We’ve been on calls, in meetings, and doing research all week, trying to figure out how we can reduce the impact of the tariffs on our US customers.
We are looking at sourcing manufacturing in low-rate countries like Myanmar, Bangladesh, and Portugal. The challenge is finding the same quality (or better) at a comparable price. This will take some time, but we’re optimistic that we can continue to produce high quality Carmico products in ways that remain accessible to our customers.
We’re also looking at warehousing in the US so that the customs processes occur before the transaction and are built into the price. This will still increase the cost to our US customers, but at a much lower rate. It will be reflected in the price, so you know exactly what you’re paying for and there won’t be any hidden customs fees you aren’t expecting.
In a similar vein, we will have a DDP shipping options, which means that the customs fees are paid at checkout. DDP reduces costs because it avoids brokerage fees and also reduces processing times because the customs documentation and declarations are handled by the brokerage when the package is shipped by the warehouse. We’ll have updates about DDP options for customers around the world once we’ve found a suitable option.
And lastly, we're looking into products that are unaffected by tariffs. We want to stay connected to our American friends as much as possible, even if the bigger ticket items aren't available to you. Keep an eye out for announcements!
A reminder about customs and brokerage fees—an excerpt from a previous blog
Now more than ever we see many people on social media claiming that carriers are holding their packages “hostage”. If your imported packages are ever held by customs with a balance to be paid, this is because your government is requiring you, the importer, to pay taxes on the imported goods. That’s it. Some people get the wrong idea that it’s the carrier or the seller asking for extra money, but it is simply your government taxing your import.
This tax is used to deter foreign trade and encourage domestic trade. Any international company you purchase from, Carmico included, has nothing to do with these fees. We don’t get a single cent of customs charges and it increases the cost to our customers.
Economic fundamentals say when the cost goes up, demand goes down. These changes to trade will severely affect us since the majority of Carmico’s market is in the US. The extent of which is unknown but it’s bad for Carmico, period.
We’ll post more updates as soon as we get clear answers about the state of the trade war.
Final thoughts
Please be kind to everyone, especially small business owners, through this trying time. Carmico was made on hopes and dreams and has been thriving until now. We have so much love and effort to lose from this trade war: our lovely, friendly Discord community, our vision for a sustainable, accessible, and expressive lifestyle brand that anyone can love, and our livelihoods. Our owner, Selina, founded Carmico almost 6 years ago now, in 2019. We had planned for Carmico to be our forever thing. We hope it can stay this way. We love your support, we love the photos you share, we love the chats we have in our emails and on our Discord server, we love you.
Thank you for all of your support until now. We hope we can stay friends through all of this. <3
Until next time,
The CarmiCrew
