# Update on US Trade Tariffs

https://www.youtube.com/watch?v=4gVE5JisFNA

[00:25] Okay.
[00:25] Hello.
[00:25] So to today we're talking about US tariffs and um changes that are coming into force on the 29th of August or at least um as of this point they're coming into force um on the 29th of August.
[00:38] Anything could happen.
[00:41] Um just by means of a very brief agenda um we're going to talk about um what is dimminimous exemption because that's what this latest executive order refers to.
[00:51] So the executive order that's been um handed out by the um Trump administration um is concerning the treatment of um goods going into the US that would um historically have been dutyfree.
[01:03] So under that dimminimous threshold or that dimminimous exemption.
[01:08] So, we'll talk a little bit about what what is that.
[01:12] Um, we'll talk a bit about those executive measures um or executive orders and what has gotten us from April all the way to to where we are today.
[01:20] Um, we I will touch a little bit on the administration's um reasoning behind the
[01:27] Suspension of Dominus and then we'll talk practically about what happens as of the 29th of August, um, and how can we adequately prepare.
[01:37] I'm conscious that many of you on the call today have never had to think about calculating duty or, you know, passing on that duty to your customers because the, the, the value or the volume of what you ship to the US has never, um, warranted that, i.e., you've maybe been able to trade below that 800, um, US dollars in the past.
[01:57] I will touch on merchandise processing fees, but I don't want anybody to worry that isn't shipping goods, um, over the value of $2,500 because that's when that additional fee kicks in, not before.
[02:11] Um, and then I'll talk about, as, as UK exporters from, from where we stand today, how can we adequately prepare, bearing in mind that, you know, the executive order was only, um, delivered on the 30th of July and we're, we're only at the 14th of August here.
[02:26] So, what can we do at haste to make sure that we can continue, um?
[02:29] Supplying our UK, our US customers,
[02:32] Sorry, um, whether they be business um or consumers.
[02:38] Um, and then I'll talk specifically about what Royal Mail and Parcel Force are doing because obviously when we talk about de minimis or goods that would have um satisfied um the de minimis threshold in the past, most of those go through um Royal Mail and Parcel Force or go through postal um postal services or postal networks, remembering that this de minimis threshold is being removed for everybody, not just the UK.
[03:07] So um it was already removed for goods originating from China and Hong Kong, and now the administration has pushed out that measure to every trading partner that that that the US has globally.
[03:20] So what are Royal Mail and Parcel Force doing, and then we'll cover off a little bit about origin at the end because um so much of of these tariffs are based on.
[03:30] The origin of the goods that you're shipping, not not the export country.
[03:34] So, not just the fact that you've shipped them from the UK, but have they actually been made in the UK?
[03:41] Can we um definitively categorize them as UK origin goods?
[03:47] So, what is a dimminimous exemption?
[03:49] Well, it's it's a threshold that every customs authority across the world sets um for low value goods essentially.
[03:59] So um any goods that um are valued at under that threshold are subjected to far less um customs scrutiny um they don't attract um any duty and they typically um go through the the postal network.
[04:15] That's typically how they enter the US and obviously US postal services um do that that last mile basically in the US.
[04:23] So, um, the US has had historically a very high, um, dimminimous threshold at $800.
[04:29] There's no other country globally that
[04:32] Matches that.
[04:34] There are other countries that have relatively high de minimis thresholds compared to us here in the UK.
[04:39] Um, but none of them at that $800.
[04:42] And to be honest, I'm gobsmacked that it hasn't been addressed before now, because obviously that duty is, um, you know, goes towards the state and I'm shocked that they've maybe allowed so much stuff to go in for so long under such a high threshold.
[05:00] But anyway, the new, um, going on to the executive orders, um, that is now going to be, um, withdrawn or suspended.
[05:06] Um, how long for, we don't know.
[05:09] My guess is that it's not going to be forever and a day.
[05:14] It would make the US, I think, probably the only country globally that doesn't have a de minimis threshold.
[05:19] Um, and obviously understanding that the real losers in this whole not trade war but trade policy are US businesses and US consumers.
[05:30] How long can they support?
[05:34] These inflated costs?
[05:38] Um, so I think over time we will start to see either um the suspension being lifted entirely or we'll see perhaps another dimminimous threshold introduced but far far lower than the $800 that was.
[05:52] So this new announcement was made on the 30th of July and everybody's been working at haste since then to get things ready so that um UK US trade flows can continue and it takes effect from the 29th of August as it stands today.
[06:09] Trump, I should say, President Trump, Trump sounds very disrespectful, but um President Trump, he even for this dimminimous um action, he has tied it back to his original um reasoning behind this new trade policy.
[06:24] Um fundamentally back to illicit drug importation, um fraudulent behavior, illegal behavior, and and that that's jeopardizing um US
[06:36] Homeland security.
[06:40] So um this is the kind of um verbiage that was around around the decision and why um the US has seen fit to remove that.
[06:49] In addition to the tariffs that's already imposed on countries globally, they've now removed this ability to um have goods go into the US that haven't perhaps been scrutinized as they would be if they were subject to to proper customs controls and customs um declarations.
[07:08] So from the 29th of August um what what does that actually mean?
[07:13] So, the dimminimous um threshold or the dimminimous treatment just affects those goods that are under that $800 um threshold.
[07:22] So, they're typically shipped by um post or by fast parcel operators.
[07:28] And when I when I talk about fast parcel operators, I'm talking about the likes of your couriers, your FedExes, your DHLs, your DPDS, and so on.
[07:38] Shipments, let's I'll come to the postal network in a second, but all shipments going by fast parcel operators will now be subject to um you know full duties basically even if they're under that 800 threshold.
[07:53] The postal network will work slightly differently.
[07:55] So bearing in mind that um not all postal um services are going to be ready for this change.
[08:01] They've only they've had less than a month to prepare for it potentially unless they've been doing work in the background.
[08:08] Um the administration has given two options um for calculation of duties for goods going through the postal network.
[08:17] So carriers or postal operators, carriers using the postal network or you know postal services providers themselves will have to calculate, collect and remit duties in advance of the goods arriving at US customs.
[08:33] Now the way they calculate this they've been given two options.
[08:35] Eventually everybody will have to use
[08:38] The advalorum methodology which is which is the standard way of valuing goods on import that that we use in international trade.
[08:48] But in the interim there's a six-month transitional um measure that has been offered to postal operators or carriers using those postal networks.
[08:57] And that is that instead of calculating duties based on um the kind of cost insurance rate um typical way that we would do the valuation they can instead apply a flat fee and that flat fee will be based on um the country of origin of the goods.
[09:17] So for example, if there was a postal operator here in the UK that was um applying the flat fee methodology, we had the lowest um IPA tariff rate of any other country globally.
[09:30] It's 10% so it's under 16%.
[09:36] So it would be an $80 flat fee would be.
[09:39] Applied to, um, to that item or to that consignment.
[09:45] Um, this is just a six-month transition period.
[09:49] So, so anybody using that, um, only has six months to use it, and as of the end of January next year, they have to default back to or default to what is the, the typical way of valuing goods, um, for customs purposes.
[10:04] Just to go back to the advorum piece here.
[10:08] So when we're calculating duty on imports, duty is usually calculated on what we call the CIF price of the goods, and in simplistic terms that is we take the cost of the goods and we apply the shipping, um, cost.
[10:25] So usually the freight and the insurance, and it's on that figure combined that we charge the duty.
[10:30] So duty is typically charged on a CIF price of goods.
[10:36] Why I'm mentioning this is because there's a little bit of, we find it confusing to to...
[10:41] Read some of the verbiage that the border and customs protection authority have put out because they refer to the duty being charged on just the goods themselves and not on the shipping as well.
[11:00] But then they refer to the methodology as being the transaction value methodology which we in international trade know that you charge the transaction if you're using the transaction value the duty is charged on the cost of the goods and also the shipping.
[11:18] So I'm just caveatting it there.
[11:20] I would say where I sit here today, I don't know as of the 29th of August, unless we can find something else that sheds more light on it or you know provides a little bit more clarity.
[11:31] I don't know whether that AIA duty will be charged on just the price of the goods or on the price of the goods combined with the shipping.
[11:39] So I'm just putting that out there.
[11:40] I'm not sure at the minute.
[11:40] Obviously if anything comes.
[11:42] To light, we will share it with you.
[11:45] Uh, I can say categorically from where we are today, having had um discussions with Royal Mail, Royal Mail will not be using the flat fee methodology.
[11:55] Royal Mail are working at haste to be able to have um the systems in place to be able to adopt the the adorum methodology.
[12:05] So still calculate the duty in the VAT um sorry the duty in the VAT the duty that's due um upfront and pay that upfront, but certainly not apply the flat fee because that would be cost prohibitive to their customers.
[12:20] You would have um some customers usually the Royal Mail network that were paying the same amount of duty as the the actual goods that their shipping cost or the duty might be more than the cost of the goods.
[12:29] So Royal Mail didn't feel like that that was something that would work for them.
[12:33] So as of the 29th of August for everybody, all duties on goods entering the e the the US um
[12:43] That would fall under the de minimis threshold have to be paid upfront.
[12:50] Um, so UK exporters ourselves we need to be able to calculate the duties in advance of the goods and potentially charge our customers those duties as well.
[13:04] Any goods that arrive at US customs that haven't had the duty paid on them prepaid will not be cleared and will be returned back to the UK.
[13:13] Um, there are some exemptions.
[13:16] So, um, you know, thinking about postal services, personal correspondence is out of scope, so that doesn't face any duties.
[13:24] Non-personal correspondence sent by Royal Mail and Parcel Force will be impacted, as it will be by fast parcel operators as well.
[13:39] So there's up to $200 of personal items that can go with a traveler in their luggage.
[13:43] That's classed as their personal allowance.
[13:45] Similarly with gifts, they can take into the US um gifts up to the value of um $100 or less.
[13:54] Again, class their personal allowance.
[13:56] There is talk of other exemptions around books, CDs, records, artwork.
[14:03] We don't have clarity at the moment as to whether they're they're going to be exempt.
[14:09] Um we have um agreements between a number of us looking at this that that as one of us hears then we'll inform the other.
[14:16] So as as soon as we hear or we get clarity um on that then obviously we'll feed that into but at the moment I would just work on the assumption that everything that goes into the US um that would have fallen under that $800 dimminimous threshold will now face duties and then obviously if we find that there are goods that are exempt then you know even better.
[14:40] It's kind of like um what is it?
[14:42] Plan for the worst and and hope for the best.
[14:43] I wanted to provide these these landed
[14:46] Cost calculations.
[14:49] What does landed cost mean?
[14:51] It means fundamentally the cost to get the goods cleared at customs in the destination country.
[14:56] And we typically say it's the price your customer will pay for those goods.
[15:01] So I split it, okay?
[15:03] Because we're just talking about de minimis exemption goods here, and we know that they typically go through either the postal network or they go via DHL and FedEx and so on.
[15:18] So I've given examples of how goods going through each one of these streams would be treated and how they'd be treated for duty purposes.
[15:25] So let's focus on Royal Mail first.
[15:27] So Royal Mail have categorically said that they will not be using the flat fee.
[15:31] Instead they will be applying the IE per tariff which for the UK, or at least for UK origin goods I should say, is 10%.
[15:38] So if we take the first example, example 1A, I've given the value of the item that we're shipping is 100.
[15:45] I've chosen a Royal Mail product, their
[15:47] International tract up to two kilograms, which has a price of eight 8 pound 50.
[15:53] Combined because we think that it will be that combined, but it might turn out that that AIA tariff is just on the £100 rather than on the £108.50, but we've combined it.
[16:07] So, um, the AIPA tariff for UK origin goods of £100 um value would be £108.5.
[16:14] So the landed cost of the goods is £119.35, and then we've kind of calculated the percentage uplift based on, you know, the the process of getting the goods cleared in the US using Royal Mail that particular product um is 19% higher than the the the actual cost of the goods themselves.
[16:38] Example 1B, I've taken I've inflated the value of the of the item, but I have um kept the the shipping um product the same.
[16:46] So what happens is
[16:49] Obviously because we're talking about a percentage here, as the value of the goods increases, the duty that we pay increases also.
[16:59] But you can see that um we've kind of got some economies of scale there because we're shipping higher value goods via the same means of shipping.
[17:08] So ultimately the uplift in price to get the goods to the consumer is 12% rather than in the 19% for the lower value goods.
[17:15] Now switch over to the fastpass operators because as we now understand it definitively goods going through the postal networks will be treated differently for duty.
[17:28] The likes of Royal Mail and Parcel Force will be allowed to simply apply the flat rate of 10% for those UK origin goods, those goods that have been made in the UK.
[17:42] Fastpass law operators however um will have to pay what's called the most favored nation rate in addition to the IPA.
[17:51] Tariff.
[17:54] So the tariff as we know they are just the tariffs that that the Trump administration imposed as of April.
[17:59] That that's that's a new tariff this year.
[18:01] The most favored nation tariff is what your goods would have um it's the duty your goods would have paid or would have been subjected to before all of this started.
[18:15] So that still exists.
[18:17] That's the most favored nation tariff.
[18:19] Um and in the US they're typically quite low.
[18:21] So for this example I've said um you know it's 3%.
[18:25] But here the fast parcel operators have to calculate that most favored nation tariff and also the pera tariff.
[18:33] So you're paying two effectively two lots of duty to send stuff through the the courier network than you are going through the posttorm network.
[18:42] The dispersement fee that I refer to here, this is a cost or a charge that or a fee that fastel operators charge you.
[18:50] Fast parcel operators are all about clearing.
[18:53] Um, huge volumes of goods very quickly.
[18:56] So when they clear at customs, they pay the duty to customs on your behalf and then they recoup the duty from you or from your customer if you're delivering at place or or whatever and your customer is responsible for those those fees.
[19:12] So they charge you almost like an admin or a facilities fee for that and it's usually between two to three or 3 to 5% and here I've put it in at 3% I think so it's 68 pm I think it's typically a bit more than that but that all adds to the landed cost.
[19:26] So you've got the value of the consignment, the the shipping fee and again I caveat that that was a price taken off FedEx's website um I'm sure there's cheaper products I'm sure there's alternative modes of shipment that you could source it's just for illustration purposes that I've chosen chosen that.
[19:45] So you've got the value of the consignment, you've got the shipping charge, you've then got the most favored nation tariff that the fast parcel operators have to charge and then you've got the AIPA tariff um which is
[19:55] What Royal Nail have to charge you also at the standard 10% providing your goods are manufactured in the UK.
[20:02] And then you've got that dispersement fee.
[20:04] So you get your landed cost which actually equates to almost double the cost of the actual goods themselves.
[20:11] Again caveating that that 73.95 shipping charge might be considerably lower.
[20:17] I've done the same again.
[20:18] So I've inflated the value of the goods in example 2B.
[20:22] And you can see that in terms of the inflated price that the customer's paying is 30% rather than 97%.
[20:31] But that's largely because they've had the economies of scale.
[20:33] They're shipping a more valuable consignment via the same shipping product.
[20:40] But you can see that their most favored nation tariff or their duty rate has gone up as has their tariff as well.
[20:52] Okay.
[20:52] So hopefully that helps because we all need to get our heads around all of a sudden maybe we've not had to.
[20:56] do it before but we need to get our
[20:57] heads around how goods are calculated
[21:00] upon import into the US. And to be to be
[21:04] quite honest it's a good it's a good
[21:06] practice to have. It's good knowledge to
[21:07] have because the it's the World Trade
[21:10] Organization that sets the rules for
[21:13] valuing goods at customs. So if they're
[21:15] valued in a certain way for import into
[21:17] the UK, they should be valued at the
[21:20] same way for going into another country
[21:21] that's a WTO country as well. Okay.
[21:25] So the merchandise processing fee that I
[21:27] mentioned before, this is just for those
[21:30] um those items that are over $2,500.
[21:34] Okay. It's a kind of it it is a
[21:36] processing fee. It's a um it's for US um
[21:41] border customs um protection to to
[21:44] process um your shipment, your import.
[21:47] Um as I say, it only applies to those um
[21:51] those imports exceeding $2,500.
[21:54] They're typically classed as formal
[21:56] entries. They're referred to as formal
[21:58] entries when they're over that
[21:59] threshold. Informal entries are those um
[22:03] those consignments or shipments that are
[22:05] under that $2,500
[22:07] um dollars. It's considered a tax, not a
[22:12] duty. Um and it's importantly, it's
[22:17] calculated on just the price of the
[22:20] goods themselves, not on the cost
[22:23] insurance freight or the basically the
[22:25] cost of the goods and the shipping of
[22:27] the goods. It's just calculated on the
[22:29] goods. And importantly,
[22:32] it has a a cap charge. Conversely, it
[22:34] has a a minimum charge as well. So, if
[22:36] you're if your consignment just hits the
[22:39] $2,500, you're going to get charged that
[22:41] $32.71.
[22:44] But similarly, your consignment could be
[22:47] massively more expensive, and you have
[22:50] the um the comfort knowing that that
[22:52] that merchandise processing fee is
[22:54] actually capped at $634. they can't
[22:57] charge you more as a percentage of the
[23:00] much higher value product that you've
[23:02] you shipped.
[23:04] So, what are the considerations for for
[23:06] us at the moment? Well, I I feel like
[23:08] I'm always talking you must be so sick
[23:10] of me talking to you about the accuracy
[23:12] of of everything that we do in
[23:13] international trade. It's probably one
[23:15] of the one of those occupations where
[23:17] attention to detail really serves you
[23:19] well because um we need to get really
[23:22] really accurate about what we're placing
[23:25] either in our Fastpass operators um
[23:28] portals or what we're inputting into
[23:31] Royal Mel's click and collect or the
[23:33] instructions that we're giving to Holers
[23:35] and so on. We should be absolutely
[23:38] um clear on what our commodity code is
[23:40] for our product. And I appreciate that
[23:42] some of you um might not you know be
[23:45] that familiar with providing a commodity
[23:47] code um but you you need to get familiar
[23:51] with it essentially and um accompanying
[23:54] that commodity code is a kind of
[23:56] detailed but succinct description free
[23:58] text description of the product so that
[24:01] if customs in the US are in any doubt
[24:04] regarding the commodity code they can
[24:06] compare it with the description of goods
[24:08] and they can work out um you know what
[24:11] what what tariff or what duty is
[24:13] actually payable on those. Um we should
[24:16] only be declaring the goods of as UK
[24:18] origin if they really are UK origin. Um
[24:22] so much of what um President Trump is
[24:26] trying to do is to is to try and stop
[24:29] people from misdeclaring the origin or
[24:31] perhaps not putting the right value on
[24:34] their goods so that they get under that
[24:36] threshold. And therefore that's
[24:38] fraudulent, right? because it's it's
[24:40] bypassing
[24:41] um duty payment and it it's not right.
[24:45] And and to be honest, you're passing the
[24:47] the problem on to your your customer um
[24:50] rather than you. You need to make a
[24:53] decision as to whether or not you're
[24:56] going to pass on these costs to your
[24:58] customer or whether you're going to
[24:59] absorb them. I'm thinking that so many
[25:01] UK businesses at the moment are probably
[25:03] not in the position um to absorb these
[25:06] extra costs. And also I would urge you
[25:08] to consider that
[25:10] US customers be they consumers or
[25:13] business customers are going to be
[25:15] facing these inflated costs from every
[25:19] country that they source from. So um
[25:23] it's not like it's just the UK it's just
[25:26] UK origin goods that they that they're
[25:28] facing these fees from. and also UK
[25:30] origin goods with that um lowest IPA um
[25:34] tariff rate you could argue that it
[25:36] might be cheaper to source those goods
[25:39] those UK origin goodats rather than you
[25:42] know from other countries I mean there's
[25:43] some countries still on 39% for what we
[25:46] would call just general products um then
[25:50] you need to like I say get familiar with
[25:51] the landed cost of um items that you're
[25:54] shipping now Royal Mail and Parcel Force
[25:57] will do this for you So, um, and it
[26:01] depends that they'll it it's different
[26:04] depending on whether your account you
[26:06] have an account with Royal Mail or
[26:07] whether you're just a kind of like
[26:09] incidental user of Royal Mail, you know,
[26:11] and you just use their click and drop
[26:13] service, which will be updated to allow
[26:15] you to continue shipping to the US and
[26:18] pay those those duties up front. If
[26:20] you're an account holder with Royal
[26:22] Mail, obviously you get the the invoice
[26:25] or the statement every month showing
[26:27] you, you know, the fees that they've or
[26:29] the duty that they've paid on your on
[26:31] your behalf. Um,
[26:34] you need to be familiar with with with
[26:36] how, you know, you need to be familiar
[26:39] with those charges. So, I think for
[26:41] every shipment that you make, even
[26:43] though it's on account with Royal Mail,
[26:45] I think you have to understand which
[26:47] charges are being um are going to are
[26:51] going to appear for that shipment.
[26:53] Obviously, if you're just using the
[26:54] click and drop service, which will be
[26:56] updated to allow you to um prepay duties
[27:00] going into the the uh the US as well,
[27:03] then the duty is calculated up front at
[27:06] the point where you book that shipment
[27:08] and where you you pay for that shipment
[27:10] to go. So, you'll always know whether
[27:13] what you've charged your customer is
[27:14] correct or or what you need to charge
[27:16] your customer if you haven't quite
[27:17] charged them yet. All the FPOS's will be
[27:20] updating their calculators on their
[27:22] websites or their portals. So depending
[27:25] on who you're using, you'll be able to
[27:26] see what the duty is going to be based
[27:29] on the information you've provided on
[27:31] the product that's been shipped. Um
[27:33] going back to those customers that have
[27:35] an account with Royal Mail or don't have
[27:38] ready access to um a kind of like, you
[27:41] know, built-in calculator
[27:43] um on their website. Um there are some
[27:46] free ones that I've listed here. My only
[27:50] concern with those would be because they
[27:51] are free um that there's no guarantee
[27:54] that they'll be you know working on the
[27:58] most upto-date data and this whole US
[28:02] trade
[28:03] policy is moving so fast and changing
[28:06] what feels like almost daily that I
[28:09] wouldn't want you to be basing your
[28:10] calculations on outdated data if that
[28:13] makes sense. If you've got um an
[28:16] e-commerce um website then you can buy a
[28:19] paid for solution like a plugin. So get
[28:21] an API to the likes of Dutify or
[28:23] Discarts. Um they have um duty um or
[28:29] landed cost calculators that you can
[28:31] plug into your e-commerce checkout so
[28:33] that that's visible for your customers
[28:35] and and also for you. But we need to get
[28:38] our heads around how our goods are
[28:40] calculate. our the duty on our goods is
[28:43] calculated it for but the US but also
[28:46] it's good practice to know for for any
[28:48] exports
[28:50] um as I said just before I wanted to
[28:52] explain how actually
[28:55] there's there's very little good news
[28:57] around at the moment but I suppose if we
[28:59] look at that the UK does have a lower
[29:02] IPA tariff than the rest of the world
[29:06] currently um China was at 10% until
[29:09] yesterday and to be quite honest with I
[29:11] haven't had a chance to um check on what
[29:14] happened because that 10% actually um
[29:19] came to an end yesterday or it was
[29:20] scheduled to come to an end. So I'm not
[29:21] sure what's happened with that. But
[29:23] generally speaking um we are in a better
[29:26] position from an import tariff into the
[29:29] US than other countries are. Okay. Um
[29:34] when you if you're in the position where
[29:36] you're shipping via a fast parcel
[29:38] operator and you are thinking well okay
[29:42] I know there's the tariff but I also
[29:44] know that my goods are going to be
[29:45] subject to the most favored nation
[29:47] tariff as well you have to consult the
[29:49] US harmonized tariff schedule and look
[29:52] for your commodity code if you can't
[29:56] and without giving you a whole um
[29:59] training session on classifying your
[30:01] goods Look for your commodity code. If
[30:03] you can't find your um if you can't find
[30:06] totally what you're looking for, look
[30:07] for the the product descriptions. Why
[30:10] can't you find what you're looking for
[30:11] exactly? I'll explain quickly. So um the
[30:15] harmonized tariff is based on the
[30:17] harmonized system. So the WTO's
[30:20] harmonized system and that is 200
[30:23] countries globally subscribe to that
[30:25] system. And effectively what they're
[30:27] saying is that they will classify their
[30:30] goods exactly the same at least up to
[30:33] the up to the first six digits. Okay? So
[30:36] I always use the example of I don't know
[30:38] why but if I'm importing aluminium
[30:41] ladders from China and aluminium ladders
[30:43] from the US the first on those import
[30:46] declarations the first six digits of the
[30:49] commodity code on those declarations
[30:51] should be the same irrespective of the
[30:53] fact that they came one came from China
[30:55] one came from the US
[30:58] on import the last four digits are
[31:00] assigned by the the country itself and
[31:03] it's usually for statistical purposes to
[31:06] to be able to map the the trade the the
[31:09] flows of trade that's coming into into
[31:11] their country basically. So in the
[31:13] tariff schedule for the US you should be
[31:16] able to find at least the first six
[31:17] digits match your export commodity code
[31:21] and then obviously the last two to four
[31:24] digits are going to be different but you
[31:26] should be able to find the description
[31:27] that accompanies the commodity code so
[31:29] you can check that way. Um I think like
[31:33] I said already US consumers and business
[31:36] customers are facing inflated costs um
[31:39] irrespective of the origin of the goods
[31:41] and where they're sourcing them from. So
[31:43] I think in in some respects maybe we're
[31:46] in a slightly better or a more
[31:48] competitive position. So as with all of
[31:51] these every webinar that I get on and
[31:52] talk to you about I'm always talking to
[31:54] you about you know don't make any
[31:56] knee-jerk reactions. Don't don't you
[31:58] know this isn't going to be in place for
[32:01] forever. And there is tons of
[32:03] information out there whether it be
[32:04] related lots of market research data
[32:07] related to um trade wars and um economic
[32:12] downturns. And it proves time and time
[32:14] again that those businesses that choose
[32:16] to
[32:18] break those barriers down or circumn
[32:20] those bumps in the road are the ones
[32:22] that come out strongest when kind of
[32:24] normality reigns again. So really the
[32:28] whole purpose of us doing these webinars
[32:30] and and finding out the information that
[32:32] you need to know is because we want you
[32:34] to continue exporting um we we don't
[32:37] want you not being able to serve your US
[32:40] customers.
[32:42] Um
[32:44] countries with high dimminimous
[32:45] thresholds. So link to what I've just
[32:47] said actually
[32:49] in as much as we don't want you to stop
[32:51] serving your US customers we also want
[32:53] you to expand beyond that as well.
[32:55] Right. So um we should never put our
[32:58] eggs in one basket. The beauty the the
[33:00] absolute beauty of export is the fact
[33:03] that you spread your risk. So as one
[33:06] route to market becomes a little bit
[33:07] dicey like the US or you have you know
[33:11] one economy not doing particularly well
[33:13] and the disposable income is kind of
[33:15] impacted by that then you spread your
[33:18] risk because you can increase your sales
[33:19] to other markets. So, I just wanted to
[33:22] reference here that, you know, okay, the
[33:24] US has had the highest minimum threshold
[33:26] at $800. I don't think we'll see that
[33:28] returned again, but there are other
[33:31] markets and English-speaking markets as
[33:33] well because some of you cite that, you
[33:34] know, the cultural barriers and the
[33:36] language barriers can sometimes be a bit
[33:38] overwhelming. Australia, New Zealand, we
[33:41] have trade agreements with them.
[33:42] Singapore, we have a trade agreement
[33:44] with Singapore. So you're not just um
[33:47] you know removing the whole the whole
[33:50] duty side of things but there are also
[33:52] the trade between both parties is is is
[33:55] simpler and there are established
[33:57] agreements on on how products and
[34:00] services from going from one region to
[34:02] another are established. So think about
[34:05] this as um
[34:08] I don't know maybe I'm just overly
[34:09] optimistic about export. I don't know.
[34:12] But I I just think that, you know, when
[34:13] something becomes a little bit more
[34:15] challenging, that's the beauty. The
[34:16] world is a big big place. It's a big
[34:19] market and there's still so much
[34:21] opportunity for UK products and services
[34:24] that, you know, if the if the US sales
[34:26] drop off a little bit because, you know,
[34:29] customers can't afford to pay those
[34:31] inflated fees. Well, then let's explore
[34:34] other markets. So, I just wanted to put
[34:36] those dimminimous thresholds in place.
[34:37] Obviously the Russia we know that there
[34:40] are big sanctions in place so it's
[34:42] prohibited to to ship any goods or
[34:44] services to Russia. So you know I've
[34:46] mentioned it there but um let's not be
[34:49] exporting to Russia anytime soon. Now to
[34:52] go into more detail about Royal Mail and
[34:54] Parcel Force. So as I said at the
[34:55] beginning, I have it on um excellent
[34:57] authority from Royal Mail Athenia
[35:00] Management themselves that they are not
[35:02] applying the flat rate um methodology to
[35:06] calculation of goods. Um they are
[35:10] working at warp speed instead to be able
[35:13] to deliver the advorum method. Their
[35:16] view on it is that for the some of the
[35:18] value of the the the actual goods that
[35:20] go through their network, if they
[35:22] applied the flat fee methodology, their
[35:24] customers would be charging their US
[35:26] customers more duty than the actual
[35:28] product was worth in the first place,
[35:30] which you know is understandable. So
[35:33] what Royal Mail are doing is they have
[35:35] existing international products as they
[35:38] call them or international services.
[35:40] They're going to be um adding to those.
[35:43] But the most important thing is they are
[35:46] going to be they in light of Brexit and
[35:49] the fact that we had this big VAT um
[35:51] issue to deal with in the EU when we
[35:53] were shipping to consumers,
[35:56] Royal Mail um in response to that
[35:58] created their postal deliver duty paid
[36:01] product, their PDDP product and you can
[36:04] now send things via PDDP to between 10
[36:10] and 12 um EU member states. And that
[36:13] means that Royal Mail um calculate up
[36:16] front the duties, they pay the duties,
[36:18] they pay the VAT, and it kind of
[36:20] reinstates the customer experience that
[36:22] we were able to deliver to US consumers
[36:25] before Brexit where they just del they
[36:27] just took delivery of the goods. They
[36:29] didn't have to pay anything to customs
[36:30] to have those goods cleared. Royal Mail
[36:33] is extending that PDDP service to the US
[36:37] and it will be available to Royal Mail
[36:39] customers and also parcel force
[36:41] customers. In fact, what we're gonna see
[36:43] with Royal Mail is um a lot more
[36:48] um a lot better use of those of of those
[36:52] both kind of networks. So, they're going
[36:54] to start pushing even if um a small
[36:57] parcel was booked by a parcel force, it
[37:00] will probably go through the Royal Mail
[37:02] network and similarly a large parcel
[37:04] booked through Royal Mail will start to
[37:06] go through parcel force because it's
[37:08] just a lot better way of working. you
[37:11] yourselves won't notice anything as the
[37:13] customers but it's just um a lot it's
[37:17] streamlining a lot of their operations.
[37:19] Um now PDDP will be available to
[37:24] um like I say Royal Mail um customers
[37:28] and parcel force customers. Now how you
[37:31] access that will depend on whether
[37:33] you're an account holder with Royal Mail
[37:35] or whether you're a non-account holder.
[37:37] So, an account holder will have um will
[37:42] be able to contact Royal Mail and ask
[37:44] for the USP PDP service to be added to
[37:48] their portfolio or to their account. If
[37:51] you have shipped to the US over the last
[37:54] 6 months, then they will add that to
[37:56] your account automatically for you to be
[37:58] able to select. So, you won't have to
[38:00] contact them. Um if you don't have an
[38:03] account with Royal Mail then they are
[38:05] working at Haste to update their click
[38:07] and drop service which will mean that
[38:09] you can um select PDDP via that route.
[38:13] So you'll access the click and drop
[38:15] website be able to um send via PDDP. It
[38:19] will calculate the duties up front.
[38:21] You'll pay them. That allows you to
[38:23] either drop the parcel off at the post
[38:24] office or arrange for Royal Mail to come
[38:26] and collect it whichever. But the
[38:28] important thing is your duty will have
[38:31] been paid before the goods actually
[38:34] leave the UK, never mind arrive at UK
[38:36] customs. So they should clear swiftly.
[38:39] Um I think probably in anticipation of
[38:43] more heavier consignments going through
[38:46] the postal network given the fact that
[38:48] the postal network subject to the tariff
[38:51] and not the plus the MFN. um they're
[38:54] going to facilitate heavier um packages
[38:57] to go through their network. So, they're
[38:59] introducing two new options for tracked
[39:02] heavier um and they're working with all
[39:06] of the platforms that some of you
[39:07] smaller businesses rely on day in day
[39:09] out to sell your goods, the Etsies, the
[39:11] eBays, and so on. They're working with
[39:13] them at Haste to make sure that those
[39:16] platforms can access PDDP
[39:19] um hopefully before the 29th of August.
[39:22] if not then very swiftly um thereafter.
[39:28] Country of origin. I'm not going to
[39:30] labor this point, but I since I've told
[39:32] you that it's something that I really
[39:33] want you to to get a handle on, then I
[39:36] think it it's only fair that I go
[39:38] through a couple of slides towards the
[39:39] end of the deck. So, country of origin
[39:41] is not country of export. And I think I
[39:43] think the message is is is getting
[39:45] through to a lot of companies now um
[39:48] because it's been talked about so much
[39:50] more. country of origin um is
[39:55] let's go through the two criteria here.
[39:57] So there there are really two criteria
[39:59] that are considered when you think about
[40:00] the origin of products. They are where
[40:04] they're wholly obtained in the country
[40:07] or there's been sufficient
[40:08] transformation
[40:10] done to a whole lot of ingredients or
[40:12] component parts in that country to be
[40:15] able to say actually all the
[40:16] manufacturing was done here so therefore
[40:18] it's UK origin. So, examples of wholly
[40:21] obtained um products would be cattle
[40:25] that have been reared in the UK,
[40:27] obviously UK origin. Um crops that have
[40:30] been harvested in the UK, obviously UK
[40:33] origin. Substantially transformed is a
[40:35] little bit trickier, right? Because we
[40:37] we are um in a global supply chain
[40:41] economy now where we buy um component
[40:45] parts from here, we assemble them there,
[40:47] we send them there for finishing. it get
[40:49] really really complicated
[40:51] because there's no
[40:53] um trade agreement
[40:56] free trade agreement between the US and
[40:58] the UK. There's an argument that says
[41:00] that the the rules around conferring
[41:03] origin are a little bit looser than they
[41:05] would be in a free trade agreement where
[41:08] you have product specific rules and you
[41:10] you follow exactly for that product. Um
[41:14] but it's usually the last pace the last
[41:16] place of substantial transformation and
[41:20] there's that word is substantial
[41:22] transformation that word sorry that word
[41:25] is substantial. So where you've taken um
[41:30] ingredients or or you know component
[41:32] parts and you've changed them into a
[41:36] different product that's substantial
[41:38] transformation. If you've just taken um
[41:42] Chinese say um component parts and just
[41:46] assembled them, there's an argument
[41:49] there that that would be questionable
[41:50] whether or not you've done enough to
[41:52] confer UK origin. Now I've given some
[41:55] examples here. So I'll I'll move on to
[41:57] the next the next slide that might help
[41:59] make it a little bit clearer. So again,
[42:01] just examples of um you know, products
[42:05] that are definitely wholly obtained, so
[42:08] therefore can confer origin. And then
[42:11] this god, this this example I have been
[42:13] throwing out for years. I love it. It's
[42:16] this is an example of where component
[42:19] parts have been bought outside of the
[42:21] UK. So leather from India, zips from
[42:24] China, fasteners from Taiwan, but those
[42:28] component parts went to make the
[42:30] finished product which is manufactured
[42:32] in the UK and that's a suitcase. And
[42:35] even though the the large makeup of that
[42:38] suitcase is made up of the leather from
[42:41] um India, the fact is you've
[42:44] substantially transformed those
[42:45] originating parts into a finished
[42:48] product and you've you've basically met
[42:51] that rule. So you can definitively say
[42:54] these goods are of UK origin. I'm
[42:56] exporting them to the US. Therefore, I'm
[42:58] sending them via the postal network and
[42:59] they will only be subjected to the 10%
[43:02] IPA tariff because they are of UK
[43:04] origin.
[43:06] Um, when I talk about substantial
[43:09] transformation,
[43:11] there's always there's also this um
[43:13] notion of insufficient processing and
[43:16] this is linked back to, you know, if
[43:18] you've got all those Chinese component
[43:19] parts and you're just assembling them.
[43:21] Grated cheese. So cheese um sourced from
[43:24] the EU but but grated in the UK, the
[43:27] process of grating hasn't done enough to
[43:30] change the cheese. Okay, it's still
[43:32] cheese. Similarly, nuts that are sourced
[43:35] from the EU, the process of shelling
[43:37] them in the UK, you haven't done enough
[43:39] to to confer UK origin because they're
[43:42] still nuts. They're shelled nuts, but
[43:44] they're still nuts. Okay. Um and I'll
[43:47] skip that that slide and anybody can
[43:49] take a look at it if you want to. So I
[43:51] want to move on to some questions. Um so
[43:53] I am going to stop sharing my slides if
[43:57] I can and I'm going to move to
[44:02] my questions which I did have them
[44:06] somewhere. She says yes because we had
[44:09] some really good ones. We asked you all
[44:10] to kind of like drive the content and
[44:12] then we had some um post the webinar as
[44:15] well. So how do we check the duty rates?
[44:17] It seems that the USA don't have the
[44:19] exact same codes as um as us. Their
[44:22] there's our shorter.
[44:25] I don't know about the shorter. Um when
[44:27] we're exporting to the US, our commodity
[44:29] codes are usually eight digits long and
[44:31] import commodity codes are usually um
[44:35] are always 10 digits long. I think if
[44:37] somebody's looked at the the US tariff,
[44:40] then they're maybe just looking at the
[44:41] first six digits or eight digits. Um but
[44:44] anyway, you just as I said earlier, you
[44:47] try and find the closest to the code and
[44:49] then base it on the um the product
[44:51] description after that and you can 99.9%
[44:55] of the time you can find your um the US
[44:59] import commodity code that correlates
[45:02] directly to the UK's export commodity
[45:05] code. Um what tariffs will be charged
[45:08] plus 10% on top of what? Is there a
[45:10] reliable way to know what tariffs will
[45:13] be applied? Well, hopefully I've
[45:14] answered that. Depending on whether
[45:16] you're pushing goods through the postal
[45:18] network or whether you're you're sending
[45:20] through the fast parcel operators, um
[45:22] we've we've broken that down. So
[45:24] hopefully you can see that. Um we have
[45:30] um apparently for the first 6 months the
[45:32] choice of either applying the
[45:33] appropriate tariff or a 60 60 pound flat
[45:37] fee. Who makes the decision? So, I can
[45:39] categorically
[45:41] um reiterate the fact that Royal Mail
[45:44] and we only had um we've only just kind
[45:46] of like had our meeting with um
[45:50] one of the senior managers that's
[45:51] leading on some of this. They are not
[45:53] going to be introducing the the flat
[45:55] fee. They are working at Haste to be
[45:57] able to use the advalorum method. So,
[45:59] you'll have that buildup method of duty.
[46:02] really excellent question on how it
[46:04] works if you're sending work for an
[46:06] exhibition on a sale or return.
[46:10] Um
[46:11] there is in in customs the notion of
[46:16] temporary import and we see it sometimes
[46:19] on um uh for gallery work or um you know
[46:24] goods that have entered the country to
[46:27] be displayed but have the potential to
[46:30] be sold while they're there.
[46:33] I don't know and it would need it would
[46:35] it would need to be checked but um we
[46:38] would certainly permit it here in the UK
[46:40] if we had goods coming over to the UK
[46:43] that were going to be displayed um for
[46:46] an exhibition or in a gallery or
[46:48] something then they would be subject to
[46:50] that temporary import which is valid for
[46:52] 2 years. If during that time those goods
[46:56] are sold
[46:58] um then that's when that duty becomes
[47:00] payable. So that's where you have to
[47:01] account for that duty. And there's
[47:03] different codes that go on the the
[47:05] import and the um reexport documentation
[47:08] to show that, but temporary import would
[47:10] be a good one to use. Um we had a lot of
[47:13] very concerned, understandably concerned
[47:16] clients on the call yesterday when they
[47:18] um when we were talking about the flat
[47:19] fee with Royal Mail, understanding that,
[47:21] you know, if they ship a a greetings
[47:23] card, a bespoke greetings card that
[47:25] might retail for under £5 and they're
[47:28] charged the flat fee, that would just be
[47:30] prohibitive. So hopefully we have um
[47:33] we've cleared that up now. So, if you
[47:35] were if your greeting card was was
[47:38] retailing for £5, by the time you've
[47:41] added the um the AIPA duty, even if it's
[47:45] charged on the card and on the shipping
[47:48] product from Royal Mail, you're still
[47:50] under a dollar in terms of your duty.
[47:52] So, hopefully that's a lot more
[47:53] palatable for you and for your
[47:54] customers. Um,
[48:02] somebody's questioning about whether or
[48:04] not Royal Nell have the time to get
[48:06] their um their ducks in a row before the
[48:09] 29th. Um, so I can say from from the
[48:13] information I've been given that account
[48:16] holders will have access, excuse me,
[48:19] account holders will have access to um,
[48:22] PDP
[48:23] from the 29th. there might be a slight
[48:26] delay on the click and drop service
[48:29] being updated. They don't know. They
[48:31] can't they can't say right now. Um but
[48:34] there might be a slight a slight delay
[48:36] there. So um
[48:38] once we've got more information and
[48:40] they're they're updating us then um
[48:42] we'll obviously share that with you. Um
[48:46] bum bum bum
[48:49] country. So royal nails verbiage is a
[48:52] little bit confusing. Senders in the UK
[48:54] will have to calculate, collect or
[48:56] account for duties at the point of sale.
[48:59] The duties are payable to US customs in
[49:01] advance of items entering the US. We
[49:04] understand required duties for UK postal
[49:06] shipments will be based on an item's
[49:08] value in the country based tariff
[49:10] country of manufacture rather than
[49:12] shipping. Um I think that's just Royal
[49:15] Mail saying that um you know the country
[49:17] of manufacturer is is is the country of
[49:20] origin rather than the country of
[49:22] shipping. A bit like I said the country
[49:24] of export isn't the same as the country
[49:26] of origin. So you might have imported
[49:29] goods from China into the UK and you're
[49:31] subsequently exporting them to the US.
[49:33] You haven't done anything to change the
[49:35] origin of those goods. Therefore they'll
[49:36] be subjected to the Chinese IPA tariff
[49:40] on entry into the US. And that's really
[49:42] important to know.
[49:45] I send specialist books worth about 20
[49:47] each to customers in the US via Royal
[49:49] Mail. I fill in the customs details, HS
[49:51] code, and so on. If books are indeed
[49:54] exempt, can I just continue doing this
[49:56] as I have been? So, as I said at the
[49:58] beginning, we're really not sure about
[50:00] books. We're awaiting further
[50:01] clarification. Um, there are rumors that
[50:04] books will be exempt. You would carry on
[50:06] filling out your paperwork as it does.
[50:09] when the goods um what happens is within
[50:12] Royal Mail's system they will have the
[50:14] collect the correct duty to apply to the
[50:17] correct commodity code. So their system
[50:20] will see that you've input a commodity
[50:22] code and a description for books and
[50:24] therefore it will assign a zero rate of
[50:26] duty rather than a 10% rate of duty if
[50:30] indeed they are exempt. So you just
[50:32] carry on doing what you're doing. Um I
[50:34] just wanted to check one point for
[50:36] clarity. My understanding from the US
[50:38] harmonized tariff schedule is that
[50:39] original works of art such as paintings,
[50:41] drawings, collages, and so on um
[50:46] carry a 0% duty rate regardless of age.
[50:50] The 10 the 10-year rule seems to apply
[50:52] only time to underco. Yeah. So, um, even
[50:58] even products that before April carried
[51:02] a zero rate of duty going into to the
[51:06] US, um, they will still be subject to
[51:10] that rate of duty of 10% if they're UK
[51:13] origin works of art, unless they are
[51:17] specifically mentioned as an exemption.
[51:19] So similar to books and records and CDs,
[51:21] we're waiting for work for further
[51:23] clarification on artwork. But just
[51:26] because the most favored nation tariff
[51:28] that we were using before
[51:31] um the administration's um
[51:35] measures back in April and and to date,
[51:38] just because that was zero rated, it
[51:40] doesn't exclude them from the tariff
[51:42] unless they're listed as an exemption.
[51:45] So I think my answer to that is um they
[51:48] would still be subject to the 10% unless
[51:50] we hear different. So I think always
[51:52] plan for the
[51:54] worst and hope for the best is again um
[51:57] my motto. So I think based on that um
[52:03] that is basically everything um from me
[52:06] um this afternoon. I think the one thing
[52:08] I would say is that um we are
[52:11] increasingly
[52:13] um
[52:14] receiving a lot of um requests for
[52:18] support and ad hoc questions which which
[52:21] one or two obviously we love to answer
[52:23] because we're here to support you but in
[52:25] the volume that we're getting them it is
[52:27] just we can't continue servicing
[52:31] everybody at that level. So, we are
[52:32] going to be introducing some um kind of
[52:36] support packages or subscription
[52:38] packages that allow you to pose those
[52:39] questions and get quicker turnaround
[52:41] times because at the moment we're having
[52:43] to try and address those questions in
[52:46] between our paid work um for our our
[52:49] standard clients if you like. So, watch
[52:52] out for more information on that. Um I'm
[52:55] going to be uploading this uh webinar to
[52:58] YouTube. If you can like and subscribe
[53:01] to our channel, that all helps our what
[53:03] we're trying to do around um supporting
[53:06] those soul traders and micro businesses
[53:09] because ultimately and small businesses
[53:12] too cuz sometimes they're the ones that
[53:13] fall through the cracks and yet are no
[53:15] less deserving of detailed and upto-date
[53:19] and good information as some of the
[53:20] bigger boys are. So, um, at that I will
[53:23] let you go and, um, enjoy the rest of
[53:26] your day and, um, I'll see you at the
[53:29] next webinar. Okay. Thanks everyone.
[53:31] Bye-bye.