Important Information for our US Customers!

[Leon]

Tariff Update for our US Customers

As many of you will already be aware, the US Administration has recently announced that the $800 De Minimis threshold is to be removed for all packages entering the US, starting from Friday August 29th.  As a result, all packages heading to US customers will now need to have tariffs applied.  The amount of the tariff is dependent on the current 'Reciprocal Tariff' rate in the country of origin, so 10% for the UK, 15% for the EU, etc.

As with all of the new tariffs, these will need to be paid by the recipient in the USA, whether that's an individual or an importer. 

The trouble for us as a business, is that there is currently no information available to explain how this new system is going to work.  We have spoken to our contact in the UK Trade Department, but they also don't have any information and are scrambling around to try and find out what UK businesses are supposed to be doing.

As far as we can tell, there are going to be 4 potential outcomes here:

Option 1 - We continue sending as normal and the US customers will be contacted by US Customs to pay the tariffs when the parcel arrives.  But with 10 million+ packages entering the US every day, the logistics of this would be crazy.  And there would likely be extra handling/admin charges added by US Customs, meaning that the costs to the US customer will be even higher.

Option 2 - We charge the customer the relevant tariffs in our Checkout and then send this money to US Customs on their behalf.  This would allow the package to clear US Customs without any problems, but at the moment there doesn't seem to be any facility for us to make the tariff payments.  Any potential payment facility would also have an admin charge applied, which we'd need to pay in order to access the service.

Option 3 - We charge the customer the relevant tariffs in our Checkout and pay the money to Royal Mail, who will then pay it on to US Customs.  We have been told that there will be a Delivered Duties Paid (DDP) service coming soon but we do not know if Royal Mail will be including a tariff payment option alongside it.  As with Option 2, we'd probably have to pay an admin charge to Royal Mail if they decide to add the tariff payment aspect.

Option 4 - Stop selling to the US, which is obviously not ideal.

Our hope is that Option 3 turns out to be viable as it seems to have the least amount of friction and risk to your parcels.  But this is all dependent on what Royal Mail decide to do and whether they're going to act as the 'middle man' in this process.  It also depends on how much they charge for the added service too.  Regardless of what happens, this is going to mean that your packages of Pendraken goodies (or from any other UK business) are going to cost more.  At the very least we'll need to add the 10% tariff fee to all orders, but we may have to add a bit extra to cover the admin fees involved in whatever system gets introduced.

So, the only advice we can give at the moment, is that if you've been planning an order in the near future, get it placed before Friday 22nd August and we'll prioritise all of our US orders and get them posted out before the tariff deadline of August 29th.  We've been told that all packages that are shipped before the deadline date shouldn't have any tariffs applied, as they were already in the postal system before the new legislation comes into force.

You can also order from Dark Horse Hobbies in the US, but be aware that these new tariffs will apply to their imports too, so they may have to put their prices up to cover the increased costs.

We've always had a fantastic customer base in the USA and these new tariffs seem to be adding a lot of unnecessary friction and costs for the US customers, as well as admin time and costs for us as a business.  We certainly don't want to lose any customers, so we're going to do everything we can to make this as simple and efficient as we can for everyone involved.

[sultanbev]

Judging from this, it appears to me there is absolutely no reason to stop sending packages to the US - the US customs just pick up and apply the fee at the US end. There might be a delay whilst they sift through 10,000,000 daily packages looking to apply the $1 tarriff to your small order......

Nobody, individual or business, should (nor presumably, legally can?) be forced to do the US government's work for them. So options 2-4 shouldn't even exist, that is just giving in to  bullying.

As a curiousity, I looked at de Minimus coming the other way. The UK for example has had a zero de Minimus for some time on VAT, but a £135 limit on customs duties (ie tarriffs applied the other way). As is often the case, the fee for opening the parcel and applying the charge is higher than the actual VAT or tax collected.

[paulr]

...
As a curiousity, I looked at de Minimus coming the other way. The UK for example has had a zero de Minimus for some time on VAT, but a £135 limit on customs duties (ie tarriffs applied the other way). As is often the case, the fee for opening the parcel and applying the charge is higher than the actual VAT or tax collected.

And that unfortunately is the challenge with option 1 above

[Leon]

Judging from this, it appears to me there is absolutely no reason to stop sending packages to the US - the US customs just pick up and apply the fee at the US end. There might be a delay whilst they sift through 10,000,000 daily packages looking to apply the $1 tarriff to your small order......

As Paul says above, the difficulty is how much the US Customs people decide to start charging to process the packages.  In the EU I think the charges vary from 5 Euros upto 22 Euros (Belgium) so it can be large percentage of the actual package value. 

I don't mind collecting/paying the tariff money as long as there a simple, efficient system in place to do so.  We have to do the same thing for the EU orders and we just submit a monthly spreadsheet of our sales and it's all done.  It takes me about 5 minutes to do. 

The concern with the US is that we've been told that US Customs will be wanting the tariffs paid before packages arrive in the US, which doesn't seem viable at either end.  I can't be submitting/sending the payments over multiple times per week, or even daily, as I just don't have the time.

[Leon]

After a bit more info today, it looks like we'll be going with Option 3, which should keep things relatively simple.  US customers will be charged the tariff in our Checkout, we'll pass that money to Royal Mail, and then they'll pass it to US Customs. 

We're now waiting for Royal Mail to activate the new shipping service, and for our website company to adjust their tariff feature to include shipping charges.  We'll aim to get all US orders sent out this week and then the new tariff charge will be added to our Checkout over the weekend.

[paulr]

well done to all involved

I'd heard talk of much much higher handling fees by US Customs

[Leon]

Further to our previous announcement, we now have more information for our US customers about the impending changes to De Minimis and imports to the US.  After talking with Royal Mail this week, they've confirmed that Option 3 from our original announcement is going to be implemented, meaning that:

- US customers will be charged a 10% tariff in our website Checkout, calculated on the total cost of both goods and shipping. 
- Orders will be sent through Royal Mail using a Delivered Duties Paid (DDP) service, which will have all of the relevant customs data applied to it. 
- US Customs will charge Royal Mail for the import tariffs, who will then in turn invoice us at Pendraken.
- Pendraken will be charged a 50p per package admin fee by Royal Mail, which we will absorb for the timebeing.


Royal Mail will be removing their current US shipping option on Tuesday 26th August, to give themselves a few days to get all US packages over to the States before the new tariff deadline.  They will then introduce their new DDP service on either Thursday 28th or Friday 29th.

Our casting team have been furiously casting up all of the US packages and there are only four US orders left to be completed, which will be done and shipped out on Tuesday.

We have turned off US shipping as of midnight tonight (Fri 22nd Aug) and will activate our new 'tariff' shipping option on Sunday evening.  All orders received after that point will be sent using the new DDP shipping service and will be fully compliant with the new tariff regulations.

One important thing to note,  tariffs are usually only paid on goods so the code on our website is built to calculate on goods only.  But as the new US tariffs are including shipping as well, our website company will need to update the code so that it includes the total value of the order when calculating the tariff charge.  They have estimated around 10 days to do this, so in the short-term we will be charging 13% of your goods total, which should cover the shipping tariff portion and ensure that we're not out of pocket on any packages.  As soon as the website company have updated their code, we'll reset it to the 10% and the calculation will be fully accurate.

So after a lot of phone calls and emails, we've now got everything in place to avoid any issues with this whole situation.  Our US customers will be paying a little more for their orders, but the process should be fairly seamless and you can continue ordering from us without any worries or unexpected bills.

As always, just give us a shout if there's any queries at all.

[paulr]

       

Very well done to all involved

In contrast New Zealand Post has suspended most parcel services to the US until further notice as airlines have declined to ship parcels until the tariff processing has been sorted out. Several small businesses have been badly affected as they are having to refund their customers as they cannot give a date when orders can be delivered.

I've seen media reports that over 20 other countries have suspended most parcel services to the US.

[d_Guy]

Indeed, well done Leon (and your whole crew).
I have already received a notice from another UK company that they will no longer ship to US. 

[Leon]

We've got another update for our US customers today, as Royal Mail have fallen at the first hurdle... 

Despite telling us that Tuesday was the last day to send US packages, instead of removing their US shipping options at the end of the day yesterday, they took them down first thing in the morning, meaning that we couldn't send the last batch of US orders.

We've raised a complaint but it's not going to change much at this point.  What this does mean is that we'll now have to send these packages using Royal Mail's new DDP service, which should become available on Thursday.  This also means that those packages will need the tariffs paying so we'll need to cover those added costs ourselves.

It will result in a couple of days delay on these outstanding orders, but there shouldn't be any other issues with the packages and they'll arrive safely next week hopefully.

Apologies to these customers for all of the hassle with this, it's certainly not been the most efficient of implementations...