Changes instituted by US Customs widens shoppers’ options to include foreign transactions.
U.S. retailers are facing greater competition for customers now that the U.S. Customs and Border Protection Agency has instituted a new, higher minimum threshold for online purchases by U.S. shoppers that makes it easier for small and medium businesses overseas to sell to the U.S. and conduct cross-border transactions on marketplaces like eBay, the Wall Street Journal reports.
The new regulations now allow Americans to purchase as much as $800 in foreign goods without paying import duties or tax, an increase from the previous cap of $200. President Obama signed the new law in February and it took effect March 10.
Before the new law, e-commerce tariff duties averaged 33 percent, according to the Wall Street Journal, citing numbers from the United Parcel Service.
These changes mean that many foreign products could now be available at lower costs to the average U.S. consumer, creating greater competition for U.S. retailers. One of the organizations lobbying for the bill was PayPal, which stated that it supported the change because “the legislation is an important step in reducing barriers to small businesses participating in cross-border trade, and allows PayPal merchants overseas to more easily access U.S. customers.”
But as foreign sellers benefit, U.S. retailers will feel the pinch. The Wall Street Journal cited the example of Melijoe, a luxury Paris-based shop that has seen orders of its luxury children’s apparel increase by 27 percent since the U.S. import law went into effect.
U.S. retailers are already feeling the pressure from online competitors like Amazon, pushing them to up their online game. This relaxation of import taxation will cause them to renew their omnichannel efforts to ensure that customer satisfaction can trump cheaper prices when it comes to winning their business.
