RBizz Corporate Accountants - Resources #Tarrifs

What Are Trade Tariffs and How Can They Affect Your Business?

Mon, 09 Feb 2026 19:33:18 +1100

What Are Trade Tariffs and How Can They Affect Your Business?

Over the past few months, we’ve heard a lot in the news about the possibility of trade tariffs, especially in relation to the tariffs imposed by the current US administration.

But what exactly is a trade tariff? What do they do? And how could high trade tariffs affect your ability to export to certain countries and territories?

What is a trade tariff?

A trade tariff is a tax that’s levied on imported goods when they pass through a country’s customs border. This mandatory tax is paid at the border, with the amount you pay determined by global classification codes for specific products and goods.

Paying the tariff increases the cost of exporting goods to this territory. Imposing the tariff discourages foreign enterprises from importing goods into the country and supports domestic businesses in making and selling the same goods locally.

What’s the impact when trade tariffs are imposed?

Imposing trade tariffs can have several significant impacts for foreign entities and businesses that trade internationally:

Reduced export demand: Foreign countries and overseas businesses can experience a sharp drop in their market share as their goods become artificially expensive due to the trade tariffs. This forces businesses to reduce their exports to this country and consider other, more profitable, territories.

Increased costs: Importers bear the direct financial burden at the border, facing higher ‘landed costs’ and administrative complexities. This can significantly reduce the importer’s profit margins and efficiency of their supply chain.

Retaliatory trade cycles: Tariffs often trigger tit-for-tat responses from foreign governments. This creates a cycle of trade barriers that leads to the market becoming more volatile and operational costs becoming less predictable – creating uncertainty for all parties involved.

How could high trade tariffs affect your business?

Economically, trade tariffs increase your cost of goods sold (COGS), by adding a tax cost whenever you export your goods into this particular territory.

With US trade tariffs being off and on it pays to scenario-plan all potential outcomes, so you’re fully prepared for the potential impact.

Talk to Us About Managing Trade Risks

With trade tariffs changing regularly, it’s important to understand how they may impact your costs, pricing, and profitability. Talk to us about scenario planning and financial forecasting so your business is prepared for potential tariff changes and global trade uncertainty.

US Ends Tax Exemption on Low-Value Parcels

Thu, 18 Sep 2025 10:23:13 +1000

US Ends Tax Exemption on Low-Value Parcels

If you export goods directly to US consumers, you’ll be aware of the de minimis exemption. Under the rules, goods under $800 were not subject to the US’s existing tariffs and import taxes.

But in a shock turn of events, US President, Donald Trump, has signed an executive order that ended the global import tax exemption on low-value parcels. This change took effect on 29 August and affects all goods and deliveries entering the US.

Let’s take a look at what this means if your small business exports directly to US consumers.

Removing the de minimis exemption on low-cost parcels will have three specific outcomes:

1. Increased costs

As the $800 de minimis exemption has been eliminated, you now face import duties and taxes on all parcels you send to the US, regardless of value. This may also introduce customs brokerage and processing fees, directly increasing your export costs.

2. Operational and logistical challenges

With every parcel now requiring full customs clearance, you can expect significant delays at the border and increased paperwork. Faced with the overwhelming cost of delivering to the US, many international postal services have made the decision to suspend services to America – including Australia Post and many European and Asia Pacific postal providers.

NZ Post and the UK’s Royal Mail initially suspended US deliveries but have now recommenced services.

3. Impact on business models

If you’re an e-commerce business that relies heavily on the duty-free exemption for low-cost international shipping, you’ll need to re-evaluate your pricing and logistics. This policy shifts the competitive landscape, potentially favouring US-based businesses.

What options do you have for delivering goods to the US?

If you’ve been using your national postal carrier as a key part of your logistics process when delivering to US customers, these suspensions are a major challenge!

So, what can you do to overcome the problem while international postal services scramble to find a workaround that will reduce the cost of delivering to the US.

Let’s look at four key options:

Partner with private delivery companies:

Try working with major private couriers like FedEx and UPS. These companies have not suspended services and are actively helping businesses with customs documentation to ensure a smoother, reliable delivery, despite the new tariffs.

2. Move to a delivered duty paid (DDP) model:

Absorb the new taxes and duties upfront to provide your customers with a transparent, final price at checkout. This prevents unexpected fees for the consumer and can reduce cart abandonment. However, higher prices may have a negative impact on your sales.

3. Suspend US operations and diversify into other markets:

If the US market becomes too unprofitable, you may be forced to suspend deliveries to the US until the situation is revised. Instead, you could expand into other international markets that have more favourable trade agreements – removing the problem of high tariffs.

Come and talk to our team about the hurdles, cost implications and logistical stumbling blocks you now face. We’ll be happy to review your current model and offer alternative solutions.