Selling low dollar value goods into the US could soon become more complex

How changes to the de minimis exemption in the US could affect Australian exporters. 

Has your business found a market for its wares outside of Australia? If you answered in the affirmative, you'll likely already be familiar with the concept of 'de minimis value'.

For the uninitiated, the term refers to the threshold below which goods are exempt from import duties and taxes. 

De minimis values vary considerably from country to country. Here in Australia, the threshold is $1000, and overseas sellers are required to collect GST on almost all goods and services imported by Australian consumers, however low their value. 

Over in the UK, the corresponding thresholds are £135 for duty and nil for Value Added Tax (the British version of GST), while for European Union members, it's a uniform 150 Euros for duty, with VAT universally applied.

And in the US, the de minimis value is a generous $US800 – but perhaps not for long, given the extraordinary taxation shake-up that's continuing to unfold across the Pacific.

Taxes and tariffs on the Trump agenda

In January, the Trump White House appointed a committee to review tariff revenues and explore the risks arising from the current implementation of the de minimis exemption.

Those risks include the US Customs and Border Protection (CBP) Service's lack of capacity to monitor the extraordinary volume of low value imports arriving in the country each week. Nationwide, the CBP processes close to four million de minimis shipments a day, a percentage of which have been found to contains illicit or contraband substances – think fentanyl, counterfeit goods, illegally imported meat products, weapons and textiles produced by forced labour.

Tightening up the system may well receive bi-partisan support, given the Biden administration announced its own plans to stop abuse of the de minimis exemption back in September 2024. 

Proposed changes included imposing tariffs on goods that threatened domestic industry or national security, and requiring sellers to file electronic certificates of compliance with the CBP at point of entry. 

Preparing to pivot to a new de minimis system

The Trump administration's committee is due to deliver its own recommendations this month. Those which are approved by the President may well be implemented quickly – perhaps at the same lightning speed with which a 10 per cent tariff was imposed on Australian imports on April 2, dubbed Liberation Day by the Trump administration.

Any changes to the de minimis system are likely to have significant implications for Australian producers and retailers selling into the US. 

Doing business over there would mean completing additional paperwork and collecting whatever new taxes or duties are imposed on their shipments.

Getting things wrong could be costly and time consuming, and lenience may not necessarily be extended to foreign businesses that fail to calculate and remit the correct sums from the outset.

Tools to make the task easier

Developing a cross-border trade strategy and tax compliance plan will help Australian exporters stay on the right side of the CBP, whenever and however the US government decides to change the way imported goods and services are taxed.

Investing in automated tax compliance technology makes it easier to do the right thing. It's designed to simplify and streamline all the tasks associated with tax compliance and global commerce, including registration, licensing, calculation, document management, reporting, e-invoicing, and cross-border compliance in the US and other countries.

Once this software is implemented in your back office, you'll have the capacity to calculate a wide range of indirect taxes in real time, including the US import duties and any applicable sales tax on low value shipments which are no longer subject to the de minimis exemption.

Choose a solution from a vendor that's committed to staying ahead of changing trade regulations worldwide and you'll continue to get it right stateside, and in every other country where your offering is sold.

Maintaining a successful export business in changing times

We're living in an age of uncertainty, with further changes to the US tax and tariffs regime likely to be implemented in the upcoming weeks and months.

Deploying automated tax compliance software will allow you to keep on selling overseas, secure in the knowledge that, whatever happens, you'll have compliance covered off. If maintaining a successful export revenue stream matters, it's foundational technology that needs to be in your tech stack ASAP.