More price increases are on the way for the logistics business, as UPS announces a new fee for international processing when it comes to packages entering the US.
It’s not secret that the logistics industry has been hit the hardest when it comes to tariffs. Many companies like General Motors have lost millions and even billions of dollars over the last few months because of these additional costs.
Well, it look like things are going to get worse before they get better, as UPS prepares for the end of the de minimis exemption by adding a new fee on international products coming into the US.
UPS Adds New International Processing Fee
UPS announced this week that it would be adding a new international processing fee for packages shipped into the US. The new fee will cost $2.50 per package and will only impact those that are shipped via one of three UPS services: UPS Worldwide Express, UPS Worldwide Express Plus, and UPS Worldwide Express NA1.
On top of that, UPS also announced that it would be adding an entry preparation charge for all low-cost shipments from Canada.
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Items with a duty value up to $200 will now pay an additional $10 per shipment and items with a duty value of between $200.01 and $800 will pay an additional $20 per shipment, according to the UPS website.
The entry preparation charge will go into effect on August 29th, while the new international processing fee will go into effect on September 8th, just in time for the de minimis exemption to end.
What Is the De Minimis Exemption?
If you’re wondering why so many shipping companies have been increasing their prices as August comes to a close, it’s likely because the de minimis exemption is expiring.
The de minimis exemption is a US policy that allows for shipments under $800 in value to be exempt from taxes and tariffs. It provided a low-cost avenue for some businesses to shop products at a more affordable price.
However, President Trump signed an executive order that closed the exemption for China and Hong Kong on May 2nd of this year, with a global removal of the exemption set for this Friday, August 29th.
The Impact of De Minimis Exemption Removal
UPS certainly isn’t the only company that is increasing its prices due to President Trump’s executive order to get rid of the de minimis exemption. FedEx also increased its international processing fee from $1.50 to $2.50 in preparation for the change.
Increased prices aren’t the worst of it either. Some companies — like the Europe-based DHL — are so put off by the added cost of doing business that they’ve opted to completely pause shipping to the US entirely.
Even entire countries are opting to stop shipments to the US. Germany, Denmark, Sweden and Italy have all stopped shipping some products to the US, while companies like France, Austria, and the UK have plans to do the same.
With the impact of more fees and higher tariffs still yet to be realized, it’s safe to say that things could start getting a lot more expensive as the rest of Trump’s presidency unfolds.
