Tariffs and Selling on eBay

[rose-dee]

This is more by way of editorial musing than anything else, add your own thoughts on the subject! 

It has struck me, watching Trump hurling insults and happily initiating trade wars lately, that his recently announced heavy (and extensive) tariffs on Chinese goods may, like most things he does, have unintended consequences -- or at least consequences Trump hasn't foreseen, thought about, or cared about. 

In his bull-in-a china-shop manner (pun intended), it seems likely that Trump will deal a serious blow to a lot of U.S. retailers who depend largely upon imports from China (including giants like Walmart).  EBay is no exception.  I have to wonder whether eBay may soon rue the day it turned its back on the millions of small, independent sellers that used to make up its primary selling base, who would now be an insurance policy against such events.   I can't see ca. 25% tariffs on Chinese goods coming into the U.S. as not having a serious impact on eBay's bottom line, especially when the proposed list includes many common household products. 

On the other hand, Canadian eBay buyers who purchase directly from Canadian sellers will benefit (assuming our government doesn't follow suit with tariffs on China -- and why would they?).  I wonder whether eBay Canadian sellers who source their products in China will still be able to sell them across the border into the U.S. tariff-free?  

So ironically, one of the unintended consequences of Trump's "big idea" to get back at China might be to actually bolster Canadian retailers' fortunes.  I believe there's a saying for that: "every cloud has a silver lining".  

[femmefan1946]

The US sellers who are dealing in Chinese goods are mostly dropshipping.

And the Chinese sellers themselves are shipping one item at a time.

The duty free allowance for American residents is $800.

So Trump's tariff will only affect WalMart, Nordstrom, Target, Ivanka Trump (hey! bonus!),  and other companies who are manufacturing in China and importing in bulk.

But it will be interesting to see if there is a political backlash from those retailers.

WalMart apparently gives to both parties, but favours conservative candidates. And this seems to be true of most of the big retailers.

Big-box Retail’s Biases

Although retail political spending is both deep and broad, retailers overwhelmingly support Republicans over Democrats. Since 2000, the country's largest big-box retailers donated to Republicans over Democrats by a margin of more than 2-to-1 (see Figure 6 & 7). Walmart—which donated to a total of 295 different candidates in the most recent election cycle—gave $1 to Democrats for every $2 donated to Republican campaigns or PACs (see Figure 8). That compares to even greater Republican leanings at Target, Home Depot, Best Buy, and Lowe's, which gave $2.14, $2.95, $3.03, and $3.50 to Republicans for every $1 to Democrats, respectively. Costco was the only company that had a strong Democratic preference, allocating just $0.04 to Republicans for every $1 in Democratic spending. But since Costco’s total spending was far lower than other retailers, its donations to Democrats over the period still amounted to less than those of big spenders Walmart and Home Depot, despite their biases.

http://prospect.org/article/how-walmart-and-home-depot-are-buying-huge-political-influence

One thing that has occured to me is that while the US economy seems to be back on its feet (3.9% unemployment for example) Americans do not seem to have any confidence in their economy. I'm still seeing moans about the bad economy two years after the defeat of Obama. I put it that way because, in my opinion, there was a lot of racism in the refusal of white America to accept that there was a turnaround and we would expect that with the rise to power of the Toddler In Chief , he would take credit for the continuing improvement.

But that message, which is tweeted from time to time, seems to be lost.

[recped]

The effect of US Tariffs on Chinese goods sold on eBay will be negligible, the tariffs imposed on US goods sold by American sellers to China will be mostly non-existent.

US/Canada eBay transactions will also see very little effect other than possible price increases for some items exported from the US to Canada that are made in China.

The potential significant effect of this "trade war" will be any long term harm to the US (and to a lesser degree Canada) economy and how increased prices may affect consumer spending. Personally I don't see much fallout just as most eBay sellers have not seen much of a positive effect from the increase in GDP and record setting employment number of the last couple of years.

I've been a merchant for 45 years, through many boom/bust economic cycles and none of them had a significant effect at a micro level, I don't see anything different happening.

[rose-dee]

You may well be right of course, but I've lived through a few economic scares myself over the decades, and this feels different because there is no adult hand on the tiller trying to steady the ship.  It's the orange faced man-child ADD sufferer in the White House who is the source of the problem, deliberately creating chaos out of relative calm.   Really, **bleep**???  

I see already today news reports that China has retaliated in kind, targeting goods that come from states that supported Trump, and Trump has now threatened to up the ante by a factor of three.   One can only hope all those mid-west U.S. farmers who will suffer will turn on Trump before it's too late.  This is a completely unnecessary battle to wage, the last thing the world needs at this point, two economic giants bashing each other over the head.  The more sinister issue is that paper cold wars can become hot wars.   

I do think that in the short term, Canadian retailers and consumers may benefit.  Huge retailers like Walmart will be worried about their U.S. market, since the vast majority of household goods these days comes from China.  Maybe they can get Trump to stand down.  It's absurdly laughable that our best hope for world economic stability (and perhaps even continued peace between superpowers) may be Walmart executives.   Yikes.   

[rose-dee]

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@femmefan1946 wrote:

The US sellers who are dealing in Chinese goods are mostly dropshipping.

And the Chinese sellers themselves are shipping one item at a time.

 The duty free allowance for American residents is $800.

Yes, this occurred to me too (after I'd posted the initial comments).  I've wondered how long it would take for someone to point out to Trump that the de minimus  personal allowance had been raised during Obama's administration.  In fact, if I recall, I think it was one of the last things that happened during his time in office.  

I've been waiting for this other shoe to drop, since clearly the high personal import allowance is an encouragement to continue to shop offshore.  

I agree it's odd that Americans by and large don't seem to be feeling buoyed by their healthy economy.  My personal theory is that it's a kind of psychological mass-depression of the majority, caused by the goings-on by the current occupier of the White House.  Sort of a mass hysteria in reverse.  

[hlmacdon]

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@rose-dee wrote:

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@femmefan1946 wrote:

The US sellers who are dealing in Chinese goods are mostly dropshipping.

And the Chinese sellers themselves are shipping one item at a time.

 The duty free allowance for American residents is $800.

Yes, this occurred to me too (after I'd posted the initial comments).  I've wondered how long it would take for someone to point out to Trump that the de minimus  personal allowance had been raised during Obama's administration.  In fact, if I recall, I think it was one of the last things that happened during his time in office.  

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He is already well aware of it since it has been a key part of NAFTA renegotiation with the US wishing to see Canada make at least some effort to raise the de minimus from it's current value. Regarding the tariffs themselves they largely target industrial/manufacturing/etc segments where imported products have often been associated with price dumping and subsidies. Any tariffs have to go through a consultation period and are subject to all manner of lobbyist pressure as well, so realistically I don't think we'll see much that targets everyday consumer goods come into play unless **bleep** for tat continues endlessly. There will be compromise and renegotiation and some token wins.

[femmefan1946]

The $800 allowance has been in place for some time, possibly since Bush, but it really only came to my attention because Obama was talking about raising it to $1000 - which matches Australia btw.

And of course, discussion here and in the press of raising the 1985(?) Canadian duty-free allowance  of $20 to match that of cross-border shoppers.

[femmefan1946]

He American negotiators is are already well aware of it since it has been a key part of NAFTA renegotiation

Fixed that for you.

I really doubt that the president is aware of anything that his voices don't tell him.

He may have been given the information, but could he take it in?

[hlmacdon]

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@femmefan1946 wrote:

He American negotiators is are already well aware of it since it has been a key part of NAFTA renegotiation

Fixed that for you.

I really doubt that the president is aware of anything that his voices don't tell him.

He may have been given the information, but could he take it in?

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Having sat through too many a poli-sci class I think I can safely say that goes for any politician. 

[femmefan1946]

I've worked for federal cabinet ministers and most are very bright and very hard working guys.

The one exception was dying slowly but still felt it was his duty to fulfill his oath of office.

And these were Harper ministers, a bunch I would not support, agree with or vote for ever.

I have met a lot of politicians living in Ottawa for 40 years, and the majority are hard workers and fast learners.

[pjcdn2005]

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@femmefan1946 wrote:

The $800 allowance has been in place for some time, possibly since Bush, but it really only came to my attention because Obama was talking about raising it to $1000 - which matches Australia btw.

And of course, discussion here and in the press of raising the 1985(?) Canadian duty-free allowance  of $20 to match that of cross-border shoppers.

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It went up from $200-$800 in 2016.

https://www.cbp.gov/newsroom/national-media-release/de-minimis-value-increases-800

[kawartha-ephemera]

Re Australian de minimus

As of last month the Australian de minimus on eBay goods is now $0.01. So our goods are now 10% less competitive versus Australian retailers.
How long do you think it will take other VAT jurisdictions to latch on to this idea?
As long as we continue to have free trade with the U.S Canadians may escape this idea but others around the world are watching for sure.

https://community.ebay.ca/t5/Announcements/Australia-GST-on-low-value-goods/ba-p/403128

[femmefan1946]

Sales tax applies even to duty free goods in most jurisdictions.

The Aussie de minimum for duty free remains at $1000 Australian.

What changed is that until recently Australia did not charge sales tax on items that were valued under $1000 Australian.

Now they do.

We see this when we get complaints about the GSP charging import fees that on examination turn out to be GST/PST/HST.

And anyone dealing with EU customers will have had complaints about it too. (The British VAT was about 17% when I had a discussion with a buyer about it some time ago.)

Americans have no federal sales taxes and so this probably has never occurred to eBay staff.

pjcdn- thank you for the correction. I was under the impression that the increase was about a decade ago.

[hlmacdon]

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@kawartha-ephemera wrote:
Re Australian de minimus

As of last month the Australian de minimus on eBay goods is now $0.01. So our goods are now 10% less competitive versus Australian retailers.
How long do you think it will take other VAT jurisdictions to latch on to this idea?
As long as we continue to have free trade with the U.S Canadians may escape this idea but others around the world are watching for sure.

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With the cost of international shipping any EU de minimus might as well be $0. 

Closely related is the issue of internet sales tax in the US. Supreme Court in the US is set to hand down a decision (or indecision) which will have some implications. Ebay is very much aware of that particular decision as they have been lobbying hard claiming it will hurt small sellers (ironic given recent events). That is the one I am paying more attention to.

[cumos55]

It  was a day or so ago that I did hear about discussions dealing with a federally regulated  internet tax for internet sales in the US.

[ypdc_dennis]

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@kawartha-ephemera wrote:
... As of last month the Australian de minimus on eBay goods is now $0.01. So our goods are now 10% less competitive versus Australian retailers.
How long do you think it will take other VAT jurisdictions to latch on to this idea?
https://community.ebay.ca/t5/Announcements/Australia-GST-on-low-value-goods/ba-p/403128

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JULY 1, 2018  is when the VAT tax collection kicks in for Australian eBay imports under $1000.

Less competitive?   Rather, Australian sellers are now more competitive (since they already deal with the Aussie sales tax).

This ebay tax collection option will only be of interest for countries that have a high duty free level. eBay collected sales tax would only be on the amount under the de minimis -- customs handles the VAT over that limit.

Elsewhere: Over on the A-river, the dot com site is already collecting state sales tax for a growing list of states. They do this for all sellers (no matter where located) listing on the A-river.com

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[widgetc]

Hopefully it all blows over.

I see 4 situations that could potentially have a big affect.

Canada raises the de minimus.

U.S. lowers it for Canada because we won't raise it.

A trade war  results in a recession.

Some of Trump's supporters, and there are many, believe his unfair trading rantings and stop purchasing anything from outside the U.S.

[marnotom!]

Should also mention that 40-odd US states charge "use tax" (generally the equivalent of state sales tax) for casual imports shipped by mail, etc., purchased from out of state and is not subject to a de minimis.

The rub is that the mechanisms for collecting use tax aren't particularly strong and rely on the honour system. Many Americans aren't even aware that it exists.

[musicyouneed]

This is not good for me.   I have quite a few buyers from Australia, when I have buyers.  I can see when other countries start charging tax on all internet sales, ebay international CD sales won't continue.  60-70% of my sales are international.   I guess I have a couple of years yet, and then I'll be too old to sell on ebay anyways.  

[marnotom!]

I doubt that, @musicyouneed. I think people buy CDs from outside their own countries because those CDs are very difficult or expensive to find domestically. Adding a little bit in VAT and processing won't change that, unless the processing fee is really out of line.