What are Tariffs, Duties, Taxes, and De Minimis Thresholds? 

Ongoing changes to tariffs are creating new challenges for cross-border shipping, affecting businesses that depend on international trade. We’re keeping a close eye on these developments to understand their impact on duties, de minimis thresholds, and overall shipping costs. For the latest official updates, we recommend reviewing the White House’s fact sheet here. 

Anyone who has traveled abroad knows that customs agents often ask questions to make sure you’re not sending anything prohibited in the country. The same process applies to goods you ship internationally. Different countries have different regulations, de minimis thresholds, and allowable items you can import. Thus, duties, tariffs, and import taxes depend on what and where you’re shipping. It may all seem confusing, but once you learn the basics, you’ll find that international shipping can be straightforward. 

What exactly are tariffs?

Simply put, a tariff is a fee imposed by a government on imported goods from a specific country during a specific stretch of time. Unlike duties, which are generally fixed and determined by a product’s value, tariffs are used strategically by governments to increase domestic consumption or negotiate trade agreements. They can change at any time. 

Tariffs play a significant role in shaping the landscape of global trade, impacting economies, and influencing pricing and market access.

What does De Minimis mean?

The term “de minimis” refers to a threshold value for imported goods below which duties and tariffs are waived. This means that if your shipment’s value falls under the de minimis threshold, your customer won’t have to pay these additional costs. This can be a significant advantage for sellers shipping small, low-value items, from small to medium-sized businesses selling t-shirts, to large businesses. 

Global Differences: Navigating Varying De Minimis Thresholds

It’s important to remember that de minimis thresholds vary significantly from country to country. For example, some countries have a relatively high de minimis threshold, while other countries may have much lower or even non-existent thresholds. This means that careful research is essential to understand the specific regulations of each country you’re shipping to.

Duties vs. Taxes: Understanding the Distinction

While often used interchangeably, duties and taxes are distinct concepts:

• Duties: These are fees imposed specifically on imported goods, often based on the product’s classification and value.
• Taxes: These include broader taxes such as Value Added Tax (VAT) or Goods and Services Tax (GST), which apply to both imported and domestically produced goods. Tariffs and duties are both considered indirect taxes. 

Understanding the difference between these charges is crucial for accurate cost calculations and customer communication.

Calculate costs with GlobalPost’s duty and tax calculator

To simplify the process of estimating these costs for you and your customers, we recommend using GlobalPost’s Duty and Tax Calculator. This tool can help you quickly determine the potential duties and taxes associated with your shipments, allowing you to provide accurate pricing on your products, with no sneaky fees. All you need to know is the correct HS code for each item you’re shipping. To make international shipping easier, they also offer a free HS code lookup tool!

Impact on the bottom line

Tariffs, duties, and de minimis thresholds directly impact your shipping expenses. Failing to account for these costs can lead to unexpected charges for your customers, potentially resulting in returned packages, retention problems, and dissatisfied buyers. To stay on top of international shipping, it’s essential to accurately calculate all potential costs and clearly communicate these costs to your customers. 

Tips for navigating regulations

To avoid costly delays and compliance issues, follow these best practices:

• Accurate product classification: Ensure your goods are correctly classified according to the Harmonized System (HS) codes.
• Proper documentation: Provide complete and accurate customs documentation, including commercial invoices and packing lists.
• Stay updated on regulations: Regularly review customs regulations and tariffs for the countries you typically ship to, as they can change frequently.
• Work with a reliable shipping partner: Choose a logistics provider with expertise in cross-border shipping and customs clearance.

How ShipStation Helps With Duties and Taxes

ShipStation helps streamline international shipping by providing affordable international shipping rates, streamlined automation processes, and the generation of customs forms. 

International carriers at your fingertips 

ShipStation Carrier Services allows you to save big on international shipping costs. It also draws funds from a single postage balance where you can access global discounts on UPS, USPS, FedEx, DHL Express, GlobalPost, Canada Post, Purolator, Evri, DPD, Armex, CouriersPlease, and many more. Many of these carriers and services are available to you upon signup. 

Reliable shipping and savings with UPS in Canada

UPS continues to help Canadian businesses navigate tariffs and streamline cross-border shipping. When you needed a reliable shipping option during the busiest time of the year, UPS from ShipStation was there. Trust UPS to continue delivering for you and your customers all year long. Plus, with Saturday ground delivery through UPS Standard^® available in Canada’s largest cities, your customers get their orders faster with added convenience. It’s an effortless way to stay competitive and efficient, to keep your customers happy.

Eliminate customer surprises with GlobalPost Plus

Imagine the frustration of a customer receiving a package and being hit with unexpected duty and tax charges. This is a common cause of returned packages and negative reviews. With GlobalPost Plus, you can eliminate this problem.

GlobalPost Plus is a service where the shipper pays all applicable duties and taxes upfront (DDP – Delivered Duty Paid). This means your customers receive their packages without any additional charges for duties or taxes, leading to a smoother and more positive experience. This is a great way to improve customer satisfaction and reduce the risk of returns.

DDU vs. DDP

DDU (Delivery Duty Unpaid) is when an item arrives and the customer/recipient has to pay the customs duties on the item. There are DDP (Delivery Duty Paid) options available, though. ShipStation provides merchants with an option to pay the duties on behalf of their customers. This option “Bill Duties to the Payor” is only available for some carriers and services, so review which services are available before offering this service to your customers. 

Automatically create customs forms

Finding the right pricing for shipping requires you to have your international paperwork filled out. ShipStation helps by allowing you to generate customs forms automatically. If you have the item descriptions on an order, ShipStation can pull that information from the order and onto the customs form. We help you create many types of customs forms that you need so your customers receive their shipments as quickly as possible.

Shipping internationally? ShipStation has the tools to help you do it efficiently and cost-effectively.

*Discounts off UPS daily rates. Rates are limited to shipping from the U.S. only. Rates and any applicable discounts are subject to change at any time without notice.