Mexico has announced that it will suspend package shipments to the United States before the end of a tariff exemption for small-value packages.
The exemption, which has allowed packages worth less than $800 to enter the US tariff-free since 2016, is set to expire on Friday.
The decision follows similar moves by postal services from several European countries, including Germany, Denmark, Sweden, Italy, and the United Kingdom, as they await further details from the US government.
The Mexican government said it will suspend shipments pending more details from Washington about new duties.
“Mexico continues its dialogue with US authorities and international postal organisations to define mechanisms that will allow for the orderly resumption of services, providing certainty to users and avoiding setbacks in the delivery of goods,” the government said.
Shipping giant DHL said “key questions remain unresolved, particularly regarding how and by whom customs duties will be collected in the future, what additional data will be required, and how the data transmission to the US Customs and Border Protection will be carried out.”
The White House announced plans to suspend the de minimis exemption for all countries on July 30, as part of US President Donald Trump’s wider trade war.
The exemption was previously suspended for China, Hong Kong, Mexico, and Canada due to concerns about the flow of fentanyl and other drugs over the US border.
A White House Fact Sheet released on July 30 said two schemes may be used to calculate tariffs for small packages. The first is calculated based on the value of the package, while the second scheme sets a tariff of $80 to $200 per item.
Both rates are based on the blanket tariff set by the Trump administration for most US trade partners in August, ranging from 10 to 40 percent. The White House has also imposed tariffs on individual sectors, such as semiconductors, steel and aluminium, vehicles and auto parts.
Mexico is still negotiating its tariff rate with the US and has pledged to raise tariffs on Chinese goods and take tougher measures against drug cartels to secure a deal with Trump. Some goods, however, will still be covered by the 2020 free trade US-Mexico-Canada Agreement.
The change is expected to dent the business of Chinese e-commerce platforms like Shein and Temu, which have evaded US tariffs by mailing directly to customers. However, it has also created confusion for other US trade partners.
The US has already doubled tariffs on many Indian goods to 50 percent over Russian oil purchases, posing a huge risk to India’s biggest export market. Brazil is also mulling legal challenges to tariffs as impacts weigh on US consumers, with coffee and beef prices expected to surge.
The situation highlights the complexities and uncertainties of international trade under the current US administration. As the expiration of the tariff exemption approaches, businesses and governments around the world are scrambling to adapt to the new rules and mitigate the impact on their economies.
The outcome of these negotiations and the implementation of the new tariffs will have significant implications for global trade and the economy.