Cahoot: Trump on Tariffs & the Future of De Minimis

All right. Well, welcome to another episode of Hot Takes with Manish and Jer bringing you the latest in E commerce news and how it may impact you. So Manish Trump wins the election. He's been talking about increasing tariffs on all imports. Some say it'll take a year to materialize, but when it does, will manufacturing shift from China, do you think? Where will it go? How quickly could a typical E commerce seller make a move to Vietnam or Bangladesh or another manufacturing location?

Well, that's a great question, Jeremy. That's a very big question. What will happen to manufacturing and so on in the U.S. clearly, what we know is that Trump has proposed some heavy tariffs, up to 60% for any goods coming coming into the US from China manufactured in China. Goods manufactured in Mexico are potentially subject to 25% tariffs. And anywhere else outside the US any other country, Trump has proposed tariffs of 10 to 20%. So no matter where the goods are being manufactured, you are going to see an increase in cost. No doubt about that because that was one of his key agendas on his campaign trail. So what can the sellers do? That's a big question. A lot of the pundits are proposing that sellers should go rush and place in all the orders now so that they can get ahead of the tariffs. But in reality, how many orders are you going to place? And do you really want to spend 10, 10 times of your capital budget on buying inventory and let it sit here in the US and how long can you dodge this for? So I personally think yes, of course, anything that you plan to consume in quarter, first quarter of next year, yes, you should try and place those orders. And what will happen with respect to manufacturing? That's a lot to be seen. You know, I wish I had a crystal ball, but you will see shifting of manufacturing and imports for sure. Will it come out completely from China? You know, not sure because China is still a very good low cost manufacturer. So I'll basically tell you that what sellers can do is basically start planning and you can cover more if you'd like to talk about what strategy sellers can implement now.

So how should sellers be thinking about the proposed changes that Biden is going to make relative to quote, unquote, significant restrictions related to the de minimis sections of the Tariff Act.

Right. So the de minimis provision allows US Companies to import certain goods under that.

Section up to $800 without paying Customs and duties. So obviously a lot of especially the Chinese vendors like Temu Shein and others have taken a lot of advantage, including many US Sellers who are importing goods and shipping them directly from nearshore like places, places like Mexico and sending them directly to US Consumers.

So that is of course a loophole.

It was never meant to be a solution that sellers have obviously taken advantage of. I expect 100% that that loophole will be tightened. What those new thresholds will be that.

Remains to be seen.

However regardless of Biden or Trump we know that that will be plugged in and especially there are certain subsections underneath that you know certain category of goods that are specifically impacted more than the others. So I expect anyone who is participating in the de minimis program should be very rapidly looking for, you know, doing.

Things how they ought to be done.

As opposed to trying to take advantage.

Of this tax loophole. Thanks Maneesh. Remember listeners, information is only power when you put it into action. So think about what you can do to improve your business in these areas and until next time keep learning and stay curious.