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Think you can increase US sales? Think, again, warns parcels expert

[ October 28, 2019   //   ]

Britain may be looking to the US as its target market in a post-Brexit world, but trading with that country has it problems too, says David Jinks, head of consumer research at parcels brokerage Parcelhero.

The US is imposing duties of 25% on traditional British goods such as clothing and whisky as part of its ongoing dispute with the European Union over subsidies to plan-maker Airbus. Jinks says: “President Trump has just slapped $7.5bn of new tariffs on a long list of products entering the US in a tit-for-tat for what he claims are illegal subsidies the EU makes to Airbus. Britain’s exporters are subject to this tax while we remain in the EU, and as Airbus has 25 sites in the UK, manufacturing components such as wings, Trump has no intention of making a special exemption for British companies.”

Moreover, customers of mail and parcels services are facing a massive cost increase to the US for letters and packets: “Last month the US won an epic battle with the Universal Postal Union for the right to set its own rates on larger letters and packets mailed into the country from overseas. President Trump successfully argued that a number of countries – particularly China – are massively underpaying to ship parcels into America; and that the US was effectively subsidising foreign e-commerce traders. Trump claims the win will save the US between $300 and $500 million per year.’

While the US Postal Service still has to finalize what its rates will be under the new system, but the price could go up enormously. The bulk of the changes will apply to letters and packages under 2kg (4.4 lbs) to capture light e-commerce purchases.  Last year a controversial court ruling also allowed US States to start charging sales taxes on items purchased online from overseas. This coincided with the majority of states introducing “marketplace facilitator legislation” which means sales taxes are automatically taken on state sales by the likes of Amazon. For example, South Dakota’s sales tax of 4.5% has added an extra $9 to an $200 item.

ParcelHero has released a new report which reveals the sales tax thresholds of every state that has imposed a distance sales tax; and details on how they plan to pursue overseas :