What will you do?
On Wednesday, President Trump signed an executive order to eliminate duty-free de minimus treatment for goods imported from China. The White House said in a statement that the executive order was designed to address the flow of opioids into the United States.
The administration also announced more sweeping tariffs on goods imported from most countries, but the ending of the de minimus exemption—which had exempted direct shipments with a value less than $800 from import duties—would primarily affect Chinese retailers Shein and Temu which market and sell their products directly to U.S. consumers.
Many travelers are already familiar with an earlier form of the de minimus exemption, which dates back nearly a century. The exemption was originally deployed to smooth the entry process for U.S. citizens traveling abroad by exempting up to $800 worth of goods imported in personal baggage when they return to the U.S. Although the duty-free import allowance is a similar exemption from import duty, it’s not affected by the restrictions on small-value goods shipped from China.
The tariffs are widely expected to raise prices on imported goods for U.S. consumers (retailers could absorb some or all of the increase, but this is unlikely), but U.S. residents with a taste for foreign products can avoid the tariffs when they travel abroad by indulging in that time-honored tradition: the duty-free shop.
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How Duty-Free Works
The notion behind duty-free shopping is simple: goods purchased by travelers immediately after boarding a flight to a foreign country aren’t subject to local taxes or import duties because they’re not being consumed locally.
Tariffs are set to take effect on April 5, but it’s unlikely that pricing on consumer goods will rise immediately as retailers will likely continue selling inventory imported before the duties took effect. Once the cost of goods rises, international travelers can purchase non-U.S.-made items outside the U.S. without being subject to import tariffs. In some countries, they can also apply for refunds of a portion of the value-added tax levied on their purchases if they buy items outside dedicated duty-free shops.
Declaring Purchases at Customs
U.S. citizens who have spent more than 48 hours outside the country and have not claimed a duty-free exemption in the prior 30 days can import up to $800 worth of goods without paying additional duties. For travelers who have been out of the country less than 48 hours or who have claimed an exemption within the last 30 days, the allowance is $200.
There are specific limitations on alcohol and tobacco—generally one liter of alcohol per person (limits are higher if coming from certain countries or U.S. territories) and/or two cartons of cigarettes.
It’s also worth noting that going over the duty-free limits means duty is only payable on the excess, not on the entire amount. So, if you import goods worth $1,000, you’re only liable to pay duty on $200 worth of goods. Because of the import allowance, travelers can still come out ahead on goods purchased at a lower price abroad, even if they ultimately pay import duties on a fraction of their purchases.
It’s also worth noting that travelers should err on the side of declaring goods they’re importing if they’re not sure whether or not they’ll owe duties. Travelers who don’t declare goods that they may need to pay import duty on can lose their Global Entry (and by extension TSA PreCheck) if they’re caught. Travelers who fail to declare items they’re importing can also face greater scrutiny on future border crossings, which could result in consistently longer wait times at border control checkpoints.
Other Duty-Free Tips
It also makes sense to check the origin of items purchase abroad to ensure you’re not unwittingly subjecting yourself to tariffs. Many countries have already pledged to retaliate with tariffs on U.S. goods in response, so buying U.S. goods abroad could result in higher prices—but not in duty-free shops, which aren’t subject to the duties.
Finally, it’s worth remembering that duty-free sales mean duties aren’t included in the purchase price of the items. Duties are still due when the items are imported to the United States if their value exceeds the exemption.
Whether casually shopping Toblerones in the duty free shop to kill time, or doing the calculations on VAT refunds on European high streets and mapping out the route to the refund office at the airport, it could be worth doing a bit of the math on foreign goods while traveling as long as the tariffs remain in place.
