What’s next for international shipping as EU ends de minimis exemption

Up until now, imports coming into the European Union that were valued under €150 fell under a de minimis exemption for low-value packages. Starting July 1, packages will have a new, temporary flat €3 customs duty per each declared line item. That means a package with five different types of products in a package valued under €150 would have a €15 fee; a package with five of the same line item would have a €3 fee.

Alison Layfield, vice president of product development at ePost Global, said brands have been considering which processes they can implement to ensure the duty is covered. “What’s really challenging with all of this is there’s no way around not paying that three euros per line item,” she said.

Brands have a few options for handling the new duty, Layfield said. Brands can collect the fee at checkout, or absorb the cost themselves through price hikes or margin erasure. This is known as “delivery duty paid,” or DDP.

Others may opt for the less straightforward “delivery duty unpaid” scenario, or DDU, which risks surprising customers with a bill when the package arrives.

But there has been some uncertainty, as countries within the European Union may have different approaches. In turn, Layfield expects brands to pay more attention to the type of customs collection they’re using. Austria and Bulgaria, for instance, allow DDU options, while others no longer allow them. Germany, for instance, will allow DDU through the end of August, Layfield said. “You have no clarity, black and white, from all of the E.U. countries. It’s not streamlined across the board.”

Another wrinkle to note: The €3 fee applies per item, and Layfield said the duty is nonrefundable if someone returns the item, which could change consumer behavior.

“I do believe in the next three to four weeks, we’re going to see a lot of changes with our customers, our DDU customers, switching over to a DDP,” she said. “If they have a team that tracks their shipments, as they go through the network, they’re going to wonder, ‘Why is my parcel sitting in customs? Why isn’t it being delivered?’ There’s just a lot of factors along the way that could become expensive for these retailers to continue with that DDU as an option.”

The €3 customs duty will apply until July 1, 2028. After that, goods will be subject to the customs tariff for that category, regardless of the package’s overall value.

Guidance from the European Union says that it is ending the exemption in part because it no longer makes sense in “the reality of the market.” Almost 5.9 billion low-value items were directly shipped from third countries to consumers in the E.U. without paying customs duties.

“This has created an unfair competition that traditional retailers cannot compete with,” the guidance says.

The week in tariffs

• The flow of tariff refunds coming from Customs and Border Protection is finally leading to some shifts within retailers’ operations. BJ’s Wholesale on its latest earnings call said it used its refunds to help drop some prices. Though the retailer didn’t spell out the math involved, executives said the decision was made to provide relief to customers who had paid higher prices due to tariffs. “We think that is the best use of funds: deploying some of the tariff rebates this quarter into that investment,” said Laura Felice, BJ’s chief financial officer. “We think it was the right thing for our members and for the business for the long term.”
• Looking ahead, Nike may share more about its tariff refund situation, as well. The company’s fourth-quarter earnings are scheduled for Tuesday, and a press release said, “These results will include a benefit from tariff refunds that was not contemplated in the company’s previously provided guidance.”

What we’ve covered

Lowe’s makes it easier to order decorative geese, above-ground pools and other marketplace items in over 1,700 stores

MR’s Allison Smith reports on Lowe’s new plan to drive more marketplace sales while making it easier for shoppers to buy products that aren’t stocked on store shelves.

The company recently integrated its third-party marketplace into My Red Vest, the software employees use in stores to help customers place orders. The update lets associates search marketplace products alongside Lowe’s own inventory and complete purchases for customers in the store, with orders shipped directly to their homes. 

Trashie looks to tackle toy waste with new $35 service

Trashie, a 2-year-old take-back service that reuses and recycles textiles, is now getting into toys. I spoke with the company’s founder and CEO, Kristy Caylor, about how the company sees a big white space in the responsible disposal of toys. (Think: stuffed animals, action figures and Legos that are still usable, but haven’t been played with in a while.)

The service is a bit eye-raising at first, since people have to pay to use it. Sending a toy take-back box will cost $35. But Caylor said the point of Trashie is to retrain people that getting rid of stuff isn’t free; all waste management comes with a cost. “We’re trying to rebuild a system that actually is not built to maximize reuse. It’s currently built to take in exactly what I need and discard the rest,” Caylor said.

What we’re reading

• Thailand, Argentina primed as next supply chain ‘Rising Stars’ -Bloomberg
• SNAP restrictions could change what shoppers buy — and food giants are watching -CNBC
• The EU is cutting tariffs on the U.S. Now comes the next fight -The Wall Street Journal