International Returns: A New Challenge for U.S. Brands

Recent changes in U.S. customs regulations have significantly complicated the process of international returns for American brands. The elimination of the de minimis rule for imports has introduced various duties and taxes, transforming a previously straightforward process into a costly ordeal.

The De Minimis Rule: What Changed?

For many years, packages valued under $800 could enter the United States duty-free. However, this is no longer the case. Now, every shipment arriving in the U.S. is subject to duties, tariffs, taxes, and processing fees, even when dealing with low-value orders.

The Impact on Consumers

“Consumers in the U.S. aren’t used to duties and taxes at all,” says Rathna Sharad, Founder and CEO of FlavorCloud. “Now even a $50 or $100 parcel can suddenly come with an unexpected bill.”

Complications in Returns

The situation becomes even more pressing when it comes to returns. When an international customer sends a product back to a U.S. brand, that package is treated similarly to a brand-new import. Many postal carriers have opted out of handling returns due to new customs paperwork and complications in remitting duties and taxes. “That’s why you’ve seen so many postal carriers stop shipping to the U.S.,” Sharad explained.

Reliance on Expensive Alternatives

As a result, brands have turned to more expensive parcel and express carriers for returns. Even with these alternatives, if a return isn’t clearly identified as rejected merchandise, it could incur new duties and tariffs. “Customs doesn’t know it’s a return unless the paperwork is very specific,” Sharad noted. “You must prove it was originally exported, rejected by the consumer, and is the exact same item coming back.”

The Cost of Returns

Even if all paperwork is in order, returns are no longer free. “You can avoid the duty, but you’re still going to be charged the tariff and processing fees,” Sharad explains. “It’s not free the way it used to be.”

When the Math Doesn’t Add Up

In some instances, the costs associated with return shipping, tariffs, and fees can surpass the value of the product itself. Consequently, some brands may refuse returns or even opt to destroy items rather than attempt to bring them back into inventory. “At that point, it’s just a math problem,” says Sharad. “If it costs more to bring it back than the product is worth, merchants are better off refusing it.”

A New Normal

Sharad emphasizes that this shift is not a temporary trend. “De minimis is not going away. This is the new normal,” she asserts. “Governments want visibility into what’s crossing their borders, and scrutiny is the name of the game.”

Consumers vs. Reality

The result is a widening gap between how international commerce functions and what shoppers expect. Many consumers still believe returns will be easy and free, even when purchasing from abroad. “Consumers don’t think in terms of domestic versus international,” Sharad warns. “They have a relationship with the brand and expect the same experience.”