February 6, 2025 • 7 mins
In this episode, I discuss the recent changes to the U.S. de minimis rule and their impact on dropshipping businesses that ship from China to the U.S.
Previously, shipments valued under $800 could enter the U.S. duty-free, but with this exemption now removed, all shipments — regardless of value — are subject to tariffs. This means increased costs, longer delivery times, and more complex customs processes for businesses sourcing from China.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Hello everybody. Anton Curley here from Drop Ship
Lifestyle. And today in this podcast
episode, I want to talk about new tariffs, delays and
potential compliance issues thatare really changing the reality
of drop shipping from China. Now this will be a relatively
quick episode. Just want to get you updated
with the facts of what just happened and how it impacts
(00:23):
people that are drop shipping from China.
But before I do that, I just want to address the elephant in
the room. You might be thinking, Anton,
why are you even talking about this?
You don't drop ship from China. And while that is true, we only
sell for US suppliers with products in stock in US
warehouses. A large portion of our podcast
listeners that aren't members ofDropship Lifestyle for some
(00:46):
reason seem to still not be aware of that.
I still get emails all the time about people asking for the best
suppliers in China, the best apps that connect with Chinese
suppliers. Again, we don't do that.
So this does not directly impactus.
But again, for a portion of the podcast only listeners, it does
impact them. So I wanted to address this to
(01:06):
cover what actually has happenedand then hopefully guide and
direct the people that still areDrop Ship from China to go check
out Drop Ship Lifestyle and do what it is we do, which is sell
high ticket products for US suppliers with products in stock
in US warehouses. OK, so first of all, what
happened? Well, on February 4th, Donald
(01:27):
Trump signed an executive order that basically removed the de
minimis rule. I have to say that a bunch of
times to get it right. De minimis, it is Latin for at
minimum. And what this rule used to do or
previously did was allow any imports valued at $800.00 or
less to enter the US duty free. So no taxes, no tariffs.
(01:51):
If anything came from China to the the US that was $800.00 or
less, it can just come in and there were no extra fees.
Well, now that is gone. And the reason this obviously
effects everybody drops up from China is because that model
relies on low ticket products which are definitely less than
$800.00. And even if you were in this
business for years and years andyears, you've never had to worry
(02:14):
about this. And again, starting February
4th, now you have to. So how does this actually impact
everything? Well, the first thing is there
are now increased cost to all your customers.
And this is a tariff of 10%, which might seem small.
Let's just say you're selling items for only $50.
Well, it's an extra $5 now. And that might sound like, well,
(02:35):
it's not that bad, but it does matter to the customer,
especially how a lot of these companies, the shipping
companies are handling them overthe past few days since this
went into place and what these companies are doing, the
shipping companies like DHL, forexample, are letting the
customers know they now have to pay this extra fee in order to
receive the product. Now, I'm telling you from
experience when working with thousands and thousands and
(02:58):
thousands of customers of, you know, over the past 20 years
almost in my drop shipping businesses, if customers receive
a notification for an item they bought before it gets delivered,
asking them for more money, they're not going to be happy.
You're going to get some people that refuse to pay for it.
You're going to get people that want refunds, you're going to
get chargebacks. This can destroy a business in
(03:18):
almost no time at all, especially if you're dealing
with high order volume. So that one impact enough would
be enough for me to stop drop shipping from China because
again, it's just going to lead to angry customers, which is no
way to sustain a business. So that right there for me would
be enough to say even if I ever did drop ship from China, I
would not be doing it right now.Now the next impact that's
(03:40):
really going to hurt everybody are extended delivery times.
Now drop shipping from China hasnever been lightning fast to
begin with. Even companies like Teemu, which
my opinion on them as someone who bought from them to kind of
test some things out, my opinionon them is they sell garbage.
Obviously they're not drop shipping, but they are shipping
straight from China and even them with previously, you know,
(04:01):
faster than average speeds are going to be destroyed by this.
So the second impact is extendeddelivery times, because part of
this executive order means all of these shipments, these under
$800 shipments coming from Chinato the US now have to go under
more rigorous custom inspections.
Now picture all of these shipments, we're talking
hundreds of thousands, if not millions that would typically go
(04:24):
right through customs and then go off to your customers.
Now have to go through a more rigorous custom inspection,
which is easily going to slow down the time of when they ship
from China from when they get toyour customer.
Now on top of that, there's another big problem here for
everybody, drop ship from China.And that is now that all of the
companies, including you, if youdrop ship from China, for every
(04:47):
single shipment that goes from China to the US, it needs to
include a 10 digit HTS. That's a code.
If you're not familiar with that, it basically stands for
harmonized tariff schedule. And what that does is identify
the product when it gets to the US so they can make sure it's
getting charged to the right amount of tariff.
So there's more administrative work, there's extended lead
(05:09):
times, there's an increased costto your customers.
Again, guys, I even if you have right, what I've always said
about drop shipping from China is that there are some people
that obviously make it work. The main reasons I never liked
it to begin with is because it is low ticket products.
So there's not a lot of money tobe made on each order.
Another reason is there are no price controls.
So someone can undercut you tomorrow in terms of pricing and
(05:32):
you can't do anything about it. And then the extended delivery
times have always been an issue with me as well.
That's why I never have like dropped it from China.
But now when you add on the factthat the products are going to
take longer to get to your customers, you have more
administrative work of getting these HTS codes on every
package. And your customer is going to
get notified that they have to pay more once the items finally
(05:53):
do clear through customs. This is just a recipe again, for
refunds, for chargebacks, for negative reviews.
And it's something that can evendestroy a business of somebody
that's made drop shipping from China work in the past.
So I just wanted to put this outthere as kind of APSA, if you
weren't aware of it, this is what happened and what is
currently happening. And if you are drop ship from
China or you considered it and you're like, OK, I still want to
(06:16):
do this business model, but I know I need to pivot.
Please go to our website, dropshiplifestyle.com.
Check out a free training I havethere.
It'll show you how to find high quality suppliers in the US, how
to pick niches that work with our business model, how we
design our stores on Shopify, how we become authorized
retailers for the brands we sellfor how we optimize our stores
(06:38):
for conversions, how we get traffic and a whole lot more.
And what it will lead to if you follow through with it is a
business that is actually set upfor success that doesn't need to
deal with any of these headachesand any of these business
killing challenges. So check that out guys.
As always, I hope you got value from this quick update.
If you're not subscribed to the podcast to make sure you do so
because we have new episodes like this every single week.
(07:00):
So thank you. I appreciate you and I'll talk
to you soon.
Hello everybody. Anton Curley here from Drop Ship
Lifestyle. And today in this podcast
episode, I want to talk about new tariffs, delays and
potential compliance issues thatare really changing the reality
of drop shipping from China. Now this will be a relatively
quick episode. Just want to get you updated
with the facts of what just happened and how it impacts
(00:23):
people that are drop shipping from China.
But before I do that, I just want to address the elephant in
the room. You might be thinking, Anton,
why are you even talking about this?
You don't drop ship from China. And while that is true, we only
sell for US suppliers with products in stock in US
warehouses. A large portion of our podcast
listeners that aren't members ofDropship Lifestyle for some
(00:46):
reason seem to still not be aware of that.
I still get emails all the time about people asking for the best
suppliers in China, the best apps that connect with Chinese
suppliers. Again, we don't do that.
So this does not directly impactus.
But again, for a portion of the podcast only listeners, it does
impact them. So I wanted to address this to
(01:06):
cover what actually has happenedand then hopefully guide and
direct the people that still areDrop Ship from China to go check
out Drop Ship Lifestyle and do what it is we do, which is sell
high ticket products for US suppliers with products in stock
in US warehouses. OK, so first of all, what
happened? Well, on February 4th, Donald
(01:27):
Trump signed an executive order that basically removed the de
minimis rule. I have to say that a bunch of
times to get it right. De minimis, it is Latin for at
minimum. And what this rule used to do or
previously did was allow any imports valued at $800.00 or
less to enter the US duty free. So no taxes, no tariffs.
(01:51):
If anything came from China to the the US that was $800.00 or
less, it can just come in and there were no extra fees.
Well, now that is gone. And the reason this obviously
effects everybody drops up from China is because that model
relies on low ticket products which are definitely less than
$800.00. And even if you were in this
business for years and years andyears, you've never had to worry
(02:14):
about this. And again, starting February
4th, now you have to. So how does this actually impact
everything? Well, the first thing is there
are now increased cost to all your customers.
And this is a tariff of 10%, which might seem small.
Let's just say you're selling items for only $50.
Well, it's an extra $5 now. And that might sound like, well,
(02:35):
it's not that bad, but it does matter to the customer,
especially how a lot of these companies, the shipping
companies are handling them overthe past few days since this
went into place and what these companies are doing, the
shipping companies like DHL, forexample, are letting the
customers know they now have to pay this extra fee in order to
receive the product. Now, I'm telling you from
experience when working with thousands and thousands and
(02:58):
thousands of customers of, you know, over the past 20 years
almost in my drop shipping businesses, if customers receive
a notification for an item they bought before it gets delivered,
asking them for more money, they're not going to be happy.
You're going to get some people that refuse to pay for it.
You're going to get people that want refunds, you're going to
get chargebacks. This can destroy a business in
(03:18):
almost no time at all, especially if you're dealing
with high order volume. So that one impact enough would
be enough for me to stop drop shipping from China because
again, it's just going to lead to angry customers, which is no
way to sustain a business. So that right there for me would
be enough to say even if I ever did drop ship from China, I
would not be doing it right now.Now the next impact that's
(03:40):
really going to hurt everybody are extended delivery times.
Now drop shipping from China hasnever been lightning fast to
begin with. Even companies like Teemu, which
my opinion on them as someone who bought from them to kind of
test some things out, my opinionon them is they sell garbage.
Obviously they're not drop shipping, but they are shipping
straight from China and even them with previously, you know,
(04:01):
faster than average speeds are going to be destroyed by this.
So the second impact is extendeddelivery times, because part of
this executive order means all of these shipments, these under
$800 shipments coming from Chinato the US now have to go under
more rigorous custom inspections.
Now picture all of these shipments, we're talking
hundreds of thousands, if not millions that would typically go
(04:24):
right through customs and then go off to your customers.
Now have to go through a more rigorous custom inspection,
which is easily going to slow down the time of when they ship
from China from when they get toyour customer.
Now on top of that, there's another big problem here for
everybody, drop ship from China.And that is now that all of the
companies, including you, if youdrop ship from China, for every
(04:47):
single shipment that goes from China to the US, it needs to
include a 10 digit HTS. That's a code.
If you're not familiar with that, it basically stands for
harmonized tariff schedule. And what that does is identify
the product when it gets to the US so they can make sure it's
getting charged to the right amount of tariff.
So there's more administrative work, there's extended lead
(05:09):
times, there's an increased costto your customers.
Again, guys, I even if you have right, what I've always said
about drop shipping from China is that there are some people
that obviously make it work. The main reasons I never liked
it to begin with is because it is low ticket products.
So there's not a lot of money tobe made on each order.
Another reason is there are no price controls.
So someone can undercut you tomorrow in terms of pricing and
(05:32):
you can't do anything about it. And then the extended delivery
times have always been an issue with me as well.
That's why I never have like dropped it from China.
But now when you add on the factthat the products are going to
take longer to get to your customers, you have more
administrative work of getting these HTS codes on every
package. And your customer is going to
get notified that they have to pay more once the items finally
(05:53):
do clear through customs. This is just a recipe again, for
refunds, for chargebacks, for negative reviews.
And it's something that can evendestroy a business of somebody
that's made drop shipping from China work in the past.
So I just wanted to put this outthere as kind of APSA, if you
weren't aware of it, this is what happened and what is
currently happening. And if you are drop ship from
China or you considered it and you're like, OK, I still want to
(06:16):
do this business model, but I know I need to pivot.
Please go to our website, dropshiplifestyle.com.
Check out a free training I havethere.
It'll show you how to find high quality suppliers in the US, how
to pick niches that work with our business model, how we
design our stores on Shopify, how we become authorized
retailers for the brands we sellfor how we optimize our stores
(06:38):
for conversions, how we get traffic and a whole lot more.
And what it will lead to if you follow through with it is a
business that is actually set upfor success that doesn't need to
deal with any of these headachesand any of these business
killing challenges. So check that out guys.
As always, I hope you got value from this quick update.
If you're not subscribed to the podcast to make sure you do so
because we have new episodes like this every single week.
(07:00):
So thank you. I appreciate you and I'll talk
to you soon.
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