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Comment by mattas | Hacker News Reader

Both Shein and TEMU are taking advantage of two changes to customs rules that have been made in the last 5 years.

First, the de minimis threshold was increased to $800. Second, CBP has introduced a new entry (Type 86) that makes it a lot easier to clear de minimis shipments.

This enables foreign retailers to easily import single shipments to US customers. Because they no longer need to deal with more complicated customs filings, they can instead use air freight and get shipments to customers quickly. They trade customs expense for premium air freight.

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They’re air freighting the goods but doing so in bulk, so it ends up being far less than what the customs fees would be. If they were shipping them in bulk to a US warehouse without a designated customer, they’d have to pay customs. But rather, they arrive at a repackager which manages to skirt these regulations - at the expense of the taxpayer and competition who follow the rules.

In other words, they’ve found a loophole to avoid customs on goods with otherwise high tariffs, pocketing some of the money for themselves and using the rest of the savings (and arguably difficult to return lower quality merchandise, we are talking about fast fashion) to undercut competition. I’d think that SV would worship this type of “disruption”.

Right. They even print the UPS/FedEx/USPS label in the distribution center in China. They throw the individual boxes in a Gaylord and inject the Gaylords into the domestic distribution network at the destination air terminal.

>Gaylord

I was going to flag this but did a double take: https://en.wiktionary.org/wiki/gaylord#Noun_2

It's also a name.

As well as a city in Michigan and Minnesota, which doesn't seem to have a connection to the corporation.

As well as a ventilation equipment manufacturer in Oregon [0]. You can imagine how it was driving by every day on the middle school bus. (About as well as Bonar Plastics, which the bus also passed every day).

[0] https://www.gaylordventilation.com/

Its also a playground equipment company! Thought it was very funny when i was eight.

And a Chicago street gang: https://en.m.wikipedia.org/wiki/Chicago_Gaylords

> I was going to flag this

Please consider easing up on the itchy trigger finger. Even without knowing the meaning, there is no way any word used in the context above could ever be construed as offensive.

So you're why we're renaming the equipment at my job! ;)

>at the expense of the taxpayer and competition

Would taxpayer dollars be better spent collecting $5 worth of duties from a shipment? Or would the customer (who are taxpayers) be better served by having to pay CBP fees for their $20 shipment from china? Would both the customer and the manufacturer (ie. "competition") be better served if the goods had to go through an intermediary in the US to reach the customer?

> Or would the customer (who are taxpayers) be better served by having to pay CBP fees for their $20 shipment from china?

Sorry, this libertarian logic falls short because there are taxpayers who are not customers of bottom-of-the-barrel Chinese doodads, and thus are being hurt by this laxness. Why should I subsidize someone else’s “seen on social media” gadget addiction?

Why should I have to pay more so overpriced brands don't have to compete as hard?

It’s not about paying more, it’s about paying the same. The local brand can not avoid the duties on products less than $X, just like you are charged sales tax at the supermarket on a $5 purchase.

Thankfully computers exist now so it is really not onerous at all to charge the correct duties and massive fees if you want to make the customs people do work (this is basically now the EU approach, and AliExpress had no problem adjusting).

Some products are too niche to be sold locally. If no local brands exist for a product I have to buy it from someone oversees and import it myself. Even if it is sold locally it may be overly marked up compared to buying it from the original seller because there is no local competition to keep the price in check.

Okay, and what part of that means normal duties should not be paid on that specialty product?

Seriously people, we have computers now. Every SaaS in Europe needs to pay correct VAT on every subscription sold based on the customer origin, it is not at all unreasonable to have online sellers pay duties for products shipped to US.

I'm already paying through the nose for foriegn stuff. I don't want even more fees to be tacked on.

So you would like taxpayers to provide a subsidy for your fidget spinner from China? I would much rather that dollar go to healthcare or higher education.

Yes, I would prefer to have my hobbies be subsidized.

I’m convinced this is a big part of Amazon’s rise to prominence. While they often had competitive pricing, they also had a built-in discount by not collecting sales tax that brick and mortar stores with nexus could not avoid. And they fought hard against any changes to the status quo as it pertains to sales tax (at least until it became advantageous to do otherwise).

I’m fairly certain Amazon knew these consumers weren’t paying use tax instead. Local stores took a beating by having to play by rules that Amazon didn’t.

Heavily discounted shipping (media mail) also supported Amazon's initial rise. Funny how cheap shipping is coming full circle.

By starting with books (and then CDs/DVDs), Jeff picked a good target: inventory that doesn't depreciate too fast, subsidized shipping, not needing to collect sales taxes up-front, high costs at b&m level, high value per weight/volume, popularity of carrying large inventory (books aren't too fungible)

Much better than pets.com selling cat and dog food.

Mail order without nexus didn't charge tax either. The Internet didn't invent the the interstate commerce loophole.

It didn’t, it just made it way easier to order from. And Amazon carried more inventory than most mail order catalogs. Subsidizing shipping helped a lot as well.

I think it’s also about keeping the wealth/supporting the relevant skills in your own community. Saving a dollar here and there helps an individual a little but the community gets damaged in the long run. And the individual suffers in the long run too.

Whether the community is hurt in the long run is a complicated economic question involving many factors.

Specialization is one of the most important motors of economic development. Not every community can or should try to produce everything.

Why should the rest of us subsidize your tax addiction? This reasoning goes both ways. And I'm not even arguing whether some tax is useful or not - in most cases buying from a foreign vendor means a far far higher overall tax rate - simply arguing whether to favor a path with more expensive middlemen or not.

I doubt that CBP spending 30+ minutes of bureaucracy and agent time to inspect, calculate the true value of, invoice and bill 100$ worth of items for 10$ worth of tariffs would be a net profit.

Anecdotally (there's probably the actual figure out there somewhere), less than 1% of all imported goods are flagged for a customs inspection. Duty is calculated and paid electronically by a licensed customs broker prior to the goods entering the country.

Type 86 filings are still necessary for di minimis shipments, so there isn't a material bureaucracy savings.

Yes, I agree. However, anecdotally again, I've never bought anything past the de minimis threshold from China that was actually labelled properly at the correct price - the likelihood of it getting flagged is low enough that it's worth just eating the loss in that case.

Given that, since it doesn't even make economic to inspect the packages even if you already knew they were mislabelled or misvalued, it's not clear to me that the taxpayer loses by increasing the de minimis threshold at least to a number where it would make sense. I'm thinking of the bureaucracy that the government incurs when they do decide to inspect and fine/confiscate, not the bureaucracy in the happy path, which as you've seen is very streamlined.

Which is fine reasoning but rarely enters into the law or regulation. A lot of inspection power has to do with other "concerns" such as mislabelling (per se), trademark protection, counterfeits, forbidden items (for example radio bands), etc etc. "Economic sense" is long lost by then.

Amazon does need the competition though

A small shop I was part of sold imported items. We bought our inventory from wholesalers that paid the import fees, added their markup, where we would then add our retail markup for sale to customers. The final death knell in our little company was from a company based in Hong Kong with retail prices cheaper than the wholesale prices we had access to. By selling direct to customers, they were bypassing the customs duties/tariffs. They would place a note in the package stating that duties were owed. Never heard of anyone's package getting stopped and held for the buyer to pay the fees for it to be released. Yeah, I'm only a "little" bitter.

I don't get why the government is so keen on destroying its local businesses. They should simply provide the same level playing field for everyone.

How is this the fault of gov’t? The rules are the same for everyone. In this case, not everyone was playing by the same rules. If you don’t understand the logic behind tariffs, that’s something you can look up on your own. To me, this is no different from the guy selling electronics out of a van in the parking lot of the electronics store. It’s not legal, but it’s not a large enough problem for anyone to do anything about. Maybe the items are stolen, maybe they’re counterfeit, or maybe they are real and just acquired by skirting the system. Either way, the person with the van is deliberately not playing by the rules everyone else does. In my situation, the van was a website and the parking lot just happened to be out of jurisdiction of any agency that could do anything about it. You can now say the same things about Ali* or other type websites.

If your government doesn't enforce that the tax/duty/whatever was paid, then someone will obviously take advantage of this. I pay taxes when I buy from Aliexpress etc. When I buy directly from outside of my tax region, the company or person that I bought from has to prove that the tax was paid when the goods enter my country or they are stopped at the border until I pay the taxes + processing fee.

Your government did not protect your interests here in ensuring that the playing field is level.

I think we should those restrictions back. The products just being mass sold by wish.com, TEMU and Shein are dangerous. Amazon and Walmart deserve just as much flack for also selling dangerous goods. Radioactive wellness bracelets to sketch powersupplies. Not only that but the carbon footprint on shit shipped is massive!!!

It's all made in China anyway so I can't imagine the carbon footprint is much more when it's shipped direct to consumers instead of going via a middlemen.

Actually it is huge because the products are typically shipped are under regulation and controls. When you make a higher quality product it doesn't always mean it will last longer, but in comparison to the other product it does.

Now we are justifying the baseline by unregulated and uncontrolled goods as a standard for quality so people use weak USB cables from an unknown or non-FCC compliant manufacturer in China and their home burns. It isn't the consumers fault because the product was sold falsely and the general consumer can't keep everything straight.

Seems after this loophole was fixed, new ones have popped up: https://thehill.com/opinion/finance/418081-usps-is-done-subs...

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