De Minimis and the Bike Shop

2019-08-23 de minimis

De Minimis: What is It? Why Do I Care?

A recap of an NBDA Webinar presented by Bob Margevicius, Executive Vice President, Specialized Bicycles and United States Trade Advisor

In July 2017, the International Trade Department of the United States Department of Commerce revised a small but critical threshold from $200 to $800. This $600 increase on “de minimis” trade, or trade that is too small to justify the cost of collecting tariffs, continues to have a resounding and negative effect on each and every bicycle retailer. Bob Margevicius, Executive Vice President at Specialized and United States Trade Advisor, explains why.

What is a DeMinimis Shipment?

  1. The goods are valued at less than $800

  2. The importer must officially declare or provide evidence of the valuation

  3. The goods are imported by one person on one day

  4. The shipment is addressed to only one consignee

  5. The goods are not tobacco, alcohol, or certain perfumes

Tariffs of course have been “trending” in trade and retail these days, as an international trade war gains steam and the United States leverages new, double-digit tariffs on billions of dollars of Chinese-made goods. Now more than ever, products that can bypass tariffs - de minimis shipments - have an automatic and distinct advantage, especially for “discretionary spending” goods, like bicycles and bike parts. 

De minimis, a Latin term, means “about minimal things”. In trade, it refers to the threshold at which a nation allows goods to be imported duty-free. The goal of de minimis is to streamline the importation of low-value shipments from one country into another. It is necessary and beneficial; however, the new $800 threshold has been detrimental to independent bicycle dealers.

Top Ten Ways that De Minimis Trade is Hurting Bicycle Retailers:

  1. De minimis shipments, which allow tariff-free sales direct to consumers, place retailers at a disadvantage. Their goods are automatically more expensive.

  2. De minimis shipments are not compliant with CPSC and other regulations, as they fly under the radar of such protocols.

  3. The value of de minimis shipments often exceeds the $800 threshold, but is understated.

  4. Goods that qualify for de minimis can be subject to counterfeiting and violations of intellectual property due to lack of inspection and regulatory oversight.

  5. De minimis shipments evade anti-dumping and Section 301 tariffs.

  6. Consumer protection measures and warranty support for de minimis shipments is minimal to non-existent.

  7. De minimis shipments bypass federal, state, and local taxes, in addition to tariffs, adding to their perceived ‘value’ to consumers and placing retailers at further disadvantage.

  8. Consumer direct sales are disruptive to the market, jeopardizing both retailers and manufacturers.

  9. De minimis shipments have a detrimental effect on U.S. jobs

  10. The recently updated U.S. threshold of $800 is much higher than that of neighboring countries (Mexico’s is $50 and Canada’s is $15), further exacerbating the U.S. retailer’s unfair position.

What Can You Do to Help?

In his role as U.S. Trade Advisor, Margevicius is representing specialty retail and actively working to have the de minimis threshold returned to $200. He shared the following recommendations for how shop owners and employees can rally to the cause:

  1. Be aware of what de minimis means, and how it affects retail and your customers

  2. Alert customers to the risks and implications of buying from overseas internet marketplace sellers

  3. Support the NBDA, which is actively working to effect change

  4. Report counterfeit goods as they are discovered in your shop

  5. Write to your Congressional representatives to tell them how de minimis is negatively affecting your business. Ask them to support the threshold reduction.

This article summarized an NBDA Webinar presented by Bob Margevicius, Executive Vice President, Specialized Bicycles and United States Trade Advisor.

NBDA Webinars are concise, information-packed sessions that help independent bicycle dealers survive and thrive in today’s marketplace. To tune in to the next one, visit our Event Calendar and register online.

Brandee LepakComment