My summer has been largely taken up by spreadsheets as I work to transition to my bookkeeping to a “Making Tax Digital”-compliant platform, and to integrate the blessed US tariffs, about which so much has already been written, into my pricing structure. This post is about the latter situation.
I was hoping to publish a new pattern every fortnight this summer and to be fully stocked for the Christmas period by the end of September. But such is the nature of running a one-person business that if technical or legislative necessities come along, my time goes on those rather than the creative work that you might think takes up the majority of my time.
In Summary
- I am still shipping to the USA as normal.
- Tariffs and fees are included in the shipping price US customers pay at the point of purchase.
- Your items will not be stopped at the US border and no further tariffs or fees will be due.
I have not stopped selling or shipping to the United States at any point, but Little Conkers has certainly been effected by the decision of the current US administration that US residents need to pay import tariffs and fees on items even of the smallest value that they import into the US. Customers in the United States will now have to pay more to receive their items, and I have spent a full week battering away at my shipping calculator spreadsheet until I am happy that I’m charging all customers fairly when taking into account the large number of variables and unknowns involved.
I thought it might be helpful to show how the updated US prices are reflected in one of my items. I’ve taken the seasonal example of my Pumpkin Crochet Kit, and you can see below how the price you will pay as a customer varies between countries and platforms to reflect the different postage, tariff and fee structures.
Please see my shops for the current prices, as they may have changed again since I published this.
*The platform fees shown here represent the amount immediately taken from any sale I make by the selling platform on which the item was listed and the payment provider. So Etsy takes fees on every sale and on my website I pay payment fees to PayPal, Stripe, etc. Etsy fees come to about 27% plus 42p per sale, while PayPal for example takes 5% plus 5p of a sale on my website.
Fees are the main reason my items are more expensive on Etsy than on my website. Notice, however, that while customers pay more on Etsy, I am left with less of each sale after fees are taken.
The tariff that US customers have to pay on my items is 10% of the item value plus a 50p handling charge.
Why don’t I just add the US tariffs on to the item price just for US customers?
Well a) there’s no way to do that on Etsy and b) then I’d have to pay tariffs on the item + tariff value. So then I’d have to increase the price more to cover paying tariffs on the tariffs on the tariffs, and so on, ad infinitum. The only answer is to add the US tariffs and related fees to the US shipping cost.
Why am I not adding exactly 10% of the item price + 50p to the US shipping?
Part of the answer is that I have to pay the platform/payment provider their fees on the tariff and handling fee as well as the basic item price. In other words, because Etsy takes 27% of the tariff and the handling fee too, I have to charge my US Etsy customers 13.7% and 69p in order to be able to cover the US customs fees.
At this point I can only be grateful that I have resisted Etsy’s unremitting pressure for years to offer “free” shipping – in other words to bundle shipping costs into the item price. Those sellers that have done this will now be paying (unfairly) the tariffs (+ Etsy’s fees on those tariffs) on shipping costs as well as the item cost, which is completely wrong. It also potentially makes a nonsense of your customs forms. Tariffs apply to the value of the item/material being imported which is what should be reported to customs, and do not apply to shipping.
There are several other aspects to working out my new prices for shipping (and in some cases products) for US customers as a result of the introduction of the tariffs, but I think I’ll save that for another post.
I thought people might also be interested to see how item progresses through the international postal system. Here’s an example of the journey of three parcels I sent to the US, Canada and Australia last week (so under the new DDP regime to the US):
Not all parcels will travel at the same rate through the system, these are just recent instances.
Please click here for more information on International Delivery.
It’s worth stating clearly that no UK rules have changed to cause this upheaval for so many UK small businesses. We had no say in this change (through our votes for example). We do appreciate that selling in a global marketplace means being flexible, and abiding by the rules of different countries into which we want to sell. However, looking at the way trading outside the UK has become so much more difficult and expensive year on year since Brexit, and remembering that it didn’t used to be this way, is depressing.
Maybe US small businesses are now experiencing an uptick in orders as US residents decide to buy from them instead of from overseas. Likewise, maybe US citizens staycationing will fill the gap left by people in the rest of the world deciding not to holiday in the USA under the current regime. Those aren’t inherently bad outcomes, but all I can say is that it’s very sad when our horizons are limited for us rather than through our own choice.
Given that I lost the ability to sell into the EU and Northern Ireland at the end of December last year, and now US customers may be put off by items being more expensive, I fear this coming season is going to be rather thin.
Legal proceedings are now ongoing in the US concerning whether the present incumbent of the White House was actually allowed to unilaterally impose the tariff changes at all. Things could be reversed or some third state of affairs might come about, in which case I’ll be back to the spreadsheets again.
