JUANA SUMMERS, HOST:
Every once in a while, you want to splurge. One of the editors of this show has been in that mood. She's been eyeing this shirt from a company that's in the U.K. It's this white button-down with khaki green stripes and, yeah, it's a little pricey, but it is so her. But she's confused about whether she can buy it. That's because of an executive order stripping away what's known as de minimis exemptions. It goes into effect today, a change that is expected to increase the price of imported goods and disrupt international shipping. Peter Eavis is a business reporter with The New York Times. He's been covering all of this and joins us now. Welcome.
PETER EAVIS: Thank you for having me.
SUMMERS: So Peter, if we can, let's start with the de minimis exemption. Tell us, how did it work?
EAVIS: It allowed you to buy an item overseas and bring it into the United States without paying tariffs or doing any sort of complicated customs paperwork as long as that item - or as long as that shipment was worth $800 or less.
SUMMERS: And now that it's gone, for all intents and purposes, how does that change things for American consumers?
EAVIS: I mean, if you were a big purchaser of goods from overseas, you will probably see the prices of some of the items that you buy rise. That's because the seller is factoring in the tariffs, and there may also be extra shipping costs because the carrier that's bringing those goods into the country has more to do now and may charge you for that. In fact, that's what I'm hearing from a lot of people, that they're getting quite expensive bills from the express carriers like DHL or FedEx or UPS.
SUMMERS: How is the Trump administration justify this change?
EAVIS: They say - and also Democrats support this as well - they say that it had allowed for unfair trade to take place. They said that businesses had exploited this exemption to bring in goods without paying tariffs, and they also said that this channel was being used for the smuggling of fentanyl.
SUMMERS: Now, in you're reporting for The New York Times, you point to something of a test case. The exemption was eliminated for China and Hong Kong first earlier this year. What have you learned from that example, and does what you're seeing there support the Trump administration's stated goals?
EAVIS: Great question. There has been a drop-off in the number of transactions that American shoppers have been doing with some of the biggest sellers of Chinese goods. You've probably heard of companies like Shein...
SUMMERS: Right.
EAVIS: ...Or Temu. Transactions at those companies fell off a cliff in May. Interestingly though, Shein's has completely - not completely, but largely recovered. And the Trump administration also said yesterday that they have collected nearly $500 million in tariffs on goods from China and Hong Kong that otherwise would have been tariff-free before the exemption went away in May. So there are some developments that would support some of the things that the Trump administration had hoped for, i.e. tariff collection and also that trade wouldn't completely collapse.
SUMMERS: Now, small business owners abroad are going to have to decide whether to pass the tariff costs off to American buyers or to absorb them themselves, but they also might have to rethink how they ship goods, right?
EAVIS: Exactly. So one of the wrinkles to all this is that if you were buying goods overseas - and a lot of people do this through Etsy and eBay, and then you were having them shipped by the international postal network. Now, that's, you know, the Royal Mail sending it to the USPS in the United States. It is not FedEx. It is not UPS. And when you do it that way, it's a much cheaper method of shipping.
But a big change occurred today. Before, the package would be sent by the mail to the United States, customs would assess it for any duties and then if there were duties to pay on that, you would have to go to the post office and pay them to get your package. That no longer exists. What happens now is that the foreign post office has to collect the duties before sending it and then try and get that money over to the United States. Most of them don't have any sort of, like, payment facilities like that up and running, and so they have suspended shipping for the time being until they get that sorted out.
SUMMERS: Now, I want to take us back to where we started this conversation, which is about my colleague and the shirt that she keeps talking about. In a nutshell, what should our editor consider as she thinks about whether to buy it given everything you've just laid out here?
EAVIS: Well, I would definitely look for any sign that they had put up prices to, you know, take into account the tariffs, first of all, and then say to herself, OK, that's too much or not. And then I would just also check what's happening with shipping. Now, if it's going to come in on an express carrier, that might add even more to the cost of it and make the purchase unattractive. But if it's coming in on the postal network, she may not even be able to get it because the seller will have learned that the Royal Mail can't actually get the package to the United States until it sets up the payment infrastructure which we just talked about.
SUMMERS: That's New York Times business reporter Peter Eavis. His latest piece for The New York Times is "A Tariff Loophole on Cheap Imports Has Closed. How Will It Affect Shoppers?" Peter, thanks so much.
EAVIS: Thank you very much. Transcript provided by NPR, Copyright NPR.
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