$800 becomes the "line of life and death" for trans-US sellers

$800 became a sword of Damocles hanging over cross-border sellers doing business in the United States.

In the past two days, the US House of Representatives Speaker Nancy Pelosi's trip to Asia and the specific route of the plane have become the focus of attention. For cross-border sellers, the tariffs on the "2022 U.S. Competition Act" previously promoted by Pelosi and others have always made them nervous.

In January 2022, U.S. Rep. Earl Blumenauer introduced the Import Security and Fairness Act as part of the U.S. Competition Act of 2022. The purpose of the bill is to prevent certain countries from using duty-free policies to enter the United States with minimum import thresholds, thereby Squeeze the market for domestic products in the United States. Once the bill is passed and takes effect, the country's goods of "key care" will no longer enjoy the convenience of the tariff-free system for cross-border small packages below US$800.

Go back to 2016, when Obama signed a bill that would increase the duty-free allowance for U.S. nationals imported from abroad from $200 to $800. After the implementation of the Act, the import market in the United States has grown rapidly. UPS and FedEx directly exploded orders on the day the Act was implemented. According to U.S. Customs data, from 2012 to 2020, the value of U.S. small commodity imports soared from $40 million to $67 billion. above. The act is also known as the "Easy Gate into the United States."

But now, the "door of convenience" is likely to be closed again. The Longchuhai Research Institute, which focuses on Sino-US logistics, told Huxiu, "Although the bill has not been passed by the House of Representatives at present, considering the current severe inflation trend in the United States, it is reasonable for the bill to be passed."

"If the products below $800 are no longer tax-free, my business may turn yellow." Wang Zilin, an independent seller with three years of experience in the industry, admitted to Huxiu that most of his products are low-priced products, and the profit margin itself is not high. .

Not only Wang Zilin, but also many cross-border sellers who sell or divert traffic through platforms such as Amazon and TikTok have expressed the same concern to Huxiu. For them, $800 seems to be a life and death line.

A large number of sellers are affected

"Once the bill is passed, the domestic B2C small seller group and some B2B small batch sellers will be the most affected." Longchuhai Research Institute told Huxiu that the model of these groups themselves is very suitable for tax-free conditions, and they usually use express delivery or small packages. The channel has a single ticket for customs clearance, and the value of the goods itself is not high, so it can have significant competitiveness in the domestic market of the United States. In addition, the Longchuhai Research Institute added that sellers who sell through Amazon, TikTok and other platforms, even if they use official logistics, as long as they are not stocked in overseas warehouses, small packages under $800 will be affected by this tariff bill.

This group is not in the minority. Small packages of goods sent from China to the United States, such as shoes and clothing, accessories, 3C digital, and household items, are usually worth less than $800 per package. According to statistics, more than 10% of goods exported from China to the United States use the minimum tax exemption policy of $800 to avoid tax. According to the latest statistics from the U.S. Customs, in the first quarter of this year, 165 million parcels entered the U.S. by air in a "duty-free mode".

"This can be described as sweeping away Chinese sellers." Wang Zilin said that he and his colleagues who are doing cross-border transactions in the United States are very worried about this.

Not only small cross-border sellers, but some large traders may also be affected by this. According to a number of people in the logistics industry, some traders will operate in the form of splitting into small packages and splitting tickets to achieve the purpose of tax avoidance. This form of splitting is not common, but there are people operating in the market, and the tax avoidance effect is relatively good.

The tariff-free bill itself requires that the goods must be imported by the same person on the same day, and the retail value is reasonable. By splitting the logistics agencies that avoid tax, the goods are generally processed into different consignees, and some similar addresses are selected to receive the goods. Rely on these measures to avoid tariffs. However, it is worth noting that in the bill, if the customs determines that the goods are subpackaged for tax avoidance, they still need to levy taxes.

At present, the new bill has not yet formulated a specific tax collection rate, but the Longchuhai Research Institute told Huxiu that according to the current tax collection methods in many countries, this rate may be 8% of the declared value.

The independent station in the United States was only opened this year, and Lei Ming, a seller who attracted traffic through TikTok, told Huxiu that the cost of attracting traffic and content production itself accounted for a relatively high proportion. If the cost of tariffs is added, it can be described as an even worse problem for its fledgling business.

whether to disagree

Compared with the more panicked small and medium-sized cross-border sellers, some cross-border DTC brands and large sellers appear to be more calm. "We basically use the overseas warehouse stocking model, which has little impact on us." Xiang Huxiu, the founder of a cross-border DTC brand, said.

Not only are the attitudes of cross-border sellers different, but industry insiders are also divided on whether the bill can finally be passed.

The Longchuhai Research Institute told Huxiu that many people in the industry are still waiting to see the bill, but in mid-June, CEOs of hundreds of American companies such as Amazon, Google, and Microsoft signed letters calling for the passage of the "American Competition Act", which caused a lot of problems. pressure. This bill is likely to have an outcome within a quarter, and whether the Biden administration can implement policies to address U.S. inflation in August-September is particularly critical.

However, many people in the industry still believe that it is too early to worry about the bill. At present, the bill is still in the evaluation stage of the House Trade Committee, and there are many differences in the United States on this bill.

"The U.S. Competition Act has had many twists and turns since it was proposed." Xiao Xiao, a cross-border e-commerce lawyer who has worked for many years, told Huxiu.

The U.S. Competition Act aims to boost U.S. high-tech research and manufacturing capabilities to counter China and other commercial rivals. An earlier version was proposed by bipartisan senators for a vote by the U.S. Senate in June 2021. The bill was then sent to the House of Representatives, which launched its own version in January 2022, growing from more than 2,000 pages to more than 3,000 pages. On February 4, the House of Representatives narrowly passed the version of the bill before submitting it to the Senate. The latter was passed on March 28 after revising the content of the bill, and the bill was returned to the House of Representatives for consideration.

Not only did the version change many times, but the content also caused differences. On May 12, members of the U.S. Senate and House of Representatives held their first meeting to agree on different versions of the bill. There is a view that the bill is currently entering the final "sprint stage" before its introduction. However, according to the "Wall Street Journal" report on May 17, around the bill, lawmakers from both parties are at odds on many issues.

Among them, the most controversial clause includes requiring the USTR to initiate the tariff exemption process. According to the Wall Street Journal, divisions over the bill are becoming partisan. Some Republicans have advocated not to rush it, while Democrats worry that Republicans will eventually oppose the bill politically motivated, denying Democrats the chance to successfully push the legislation in an election year.

Regardless of the final outcome of the bill, it is especially critical for cross-border sellers to have a way out now.

In the process of communicating with Tiger Sniff, many people in the logistics industry have regarded overseas warehouses as an alternative. In addition, it is also a feasible way to set up a manufacturing plant in a third country to ship to the United States.

However, these plans also have limitations. The layout of overseas warehouses requires adjustment of categories, and products with high profits and high customer unit prices are more applicable. However, for some small and medium-sized sellers, the products they sell are just low-priced products. They need to adjust their new cross-border thinking. As for the establishment of manufacturing plants in third countries, some companies choose to ship Chinese components to third countries for assembly, and obtain the country's certificate of origin on this basis. However, the new bill also has relevant explanations for products assembled in third countries. If this method is not allowed, it will also be a blow to many cross-border merchants.

many challenges

For the current cross-border Chinese merchants in the United States, in addition to concerns about this bill, there are more challenges.

"The Biden administration's proposal to impose tariffs on high-tech electronic products based on Section 301 is more important than the $800 tariff incident." The Longchuhai Research Institute told Huxiu that it is now 2022, and the Biden administration In order to snatch the votes in the general election, it is likely that the sanctions against my country will be maintained as much as possible to obtain the support of the hawks, while the support of the rest of the people is looking forward to the easing of inflation.

However, high-tech electronic products are in conflict with sensitive content such as privacy rights in the national conditions of the United States, so this is the case. If U.S. inflation eases in the second half of the year, the Biden administration may continue to attack Chinese imports. At the same time, it is the time for sellers to choose products in autumn. Sellers should properly avoid or reduce the selection of sensitive products such as cotton fabrics and high-tech electronic products to reduce the risk of going overseas.

In addition to more tariff restrictions, Sino-US logistics has also faced roller coaster fluctuations in the past two years.

"In 2022, with the relaxation of foreign epidemic policies, the demand for online shopping has plunged, and the income of sellers has also entered a sharp decline." Longchuhai Research Institute said. According to his description, the online shopping fire in 2021 can be said to be in short supply. A large number of Chinese people enter the market as sellers to pan for gold, and the cost of logistics and other services will gradually rise.

At the same time, the weakness of Sino-US logistics volume and imperfect details is very obvious to everyone. The small one is the congestion of the ship, and the big one is the loss of the goods. The lack of comprehensive details of Sino-US logistics has caused many sellers to suffer a lot of losses before selling, which has led to the intensification of the contradiction between the seller and the logistics side. As the time enters 2022, the multi-dimensional problem of going overseas has greatly reduced the activity of sellers going overseas. The drop in shipping prices is actually a reflection of the waning enthusiasm of sellers going overseas.

For cross-border sellers in the US, the challenges are not over.

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