December 7, 2017

Tear Down the Littlest Trade Barrier

Christine McDaniel

Senior Research Fellow

With trade talks regarding the World Trade Organization and North American Free Trade Agreement under way, the Trump administration can help American exporters, especially small businesses, by urging other countries to relax a barrier on small trades.

The de minimis threshold is a valuation ceiling governments set on imported goods. Shipments costing over that amount are subject to duties, taxes and clearance procedures. The U.S. has one of the highest thresholds in the world, at $800, which is beneficial to American consumers and other countries that want to export goods to the U.S.

But the duty-free thresholds vary widely. China’s is as low as $8, Canada’s around $20, and Mexico’s $300. A U.S. business selling a new gadget for $50 would need to pay a duty on an order from Canada or China, and the company faces entirely different taxes, regulations and trade policies in each country. To make matters more complicated, some regions, such as the European Union, have different thresholds for a duty and a value-added tax.

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