Lisa Anderson, from LMA Consulting Group, was asked to comment on the de minimis exemption, which provides essential access to affordable goods for those who live in a community without access, locally, to retail stores.  ‘De minimis’ refers to a limit below which something is considered too small to warrant attention. The Trump administration has delayed cancellation of the exemption until the US Customs and Border Protection have the systems in place to process data and duty on an estimated four million packages per day.

The de minimis exemption has mainly been focused on e-commerce shippers direct from China, although it was a way to avoid tariffs if the shipments were small enough.
 
“If you are an importer, you should contact a customs broker if you haven’t already done so”, Ms Anderson said. “Companies will have no choice but to pay the tariffs for an interim period. That will be a challenge for the business model and cash flow of e-commerce companies. Additional duties might be passed along to consumers upfront; however, they will quickly re-evaluate their business model and supply chain. Although they can move towards shipping in bulk to minimize costs and distribute once in the U.S., this strategy will not mitigate the cost of the tariffs, and so they are likely to explore other countries for production and distribution. In fact, many companies are likely to evaluate producing and distributing from the U.S. to better control their supply chain and mitigate risk.  I think it is likely that the weaker companies will exit the business if they are living on tariff-free costs with minimal cash flow, leaving significant opportunities for the companies that pursue these strategies to gain volume to further mitigate costs.”
 
In terms of the current logistical challenges, delays and disruptions are bound to occur. Smaller companies and cash-constrained companies will experience delays as they figure out how to handle this change. As the package shippers work with customs to collect tariffs, it is likely to cause delays while the process is ironed out. “Businesses should quickly evaluate their options to mitigate delays while working on a longer-term strategy,” Ms Anderson added. “At a minimum, businesses should work with the appropriate parties to make sure their paperwork and packages are set up to get through customs successfully. They could also pursue short-term strategies such as bulk shipping and setting up a partner to distribute while working through longer-term strategies. If an importer, their customs broker will handle the process while their supplier changes strategies and/or they look for sourcing alternatives.”