New US Regulations just KILLED Dropshipping - IT'S OVER!

Summary

In this video, the speaker addresses the U.S. government's crackdown on the de minimis rule, which allows goods under $800 to enter the U.S. without customs duties. E-commerce giants like Shein and Teu have exploited this rule, leading to concerns about unfair trade and safety risks. The video explains the changes in customs duties, data requirements, and the need for certificates of compliance, and how these changes could impact drop shippers. The speaker suggests staying calm, diversifying suppliers, and exploring alternative markets to mitigate potential disruptions in the business. The video encourages proactive adaptation to the evolving regulations.

Takeaways

• 😀 Drop shipping is not going anywhere despite concerns, and those saying otherwise are likely fearmongering or opposed to the model.
• 📦 Drop shipping involves setting up an online store, sourcing products from third-party suppliers, and never physically handling inventory.
• 🌍 The de minimis rule allows goods under $800 to enter the U.S. without customs duties, which benefits drop shippers using suppliers like AliExpress.
• 🚚 The U.S. is cracking down on the de minimis rule due to concerns about unfair trade practices, especially by companies like Shein and Temu exploiting it.
• ⚖️ The crackdown on the de minimis rule is also targeting large companies like Shein and Temu, which have been using the exemption to avoid U.S. tariffs.
• 💼 The de minimis rule has led to an influx of dangerous, counterfeit, and potentially unsafe products entering the U.S., overwhelming customs enforcement.
• 📉 New changes will involve higher costs and more documentation for products that fall under specific U.S. tariffs (e.g., electronics, textiles, solar panels).
• 📝 The second change involves more rigorous data requirements, including a 10-digit tariff code and the identification of the party claiming the exemption.
• 🛡️ The third change requires importers to file electronic certificates proving their products meet U.S. safety and consumer standards.
• 💡 Drop shippers should remain calm, consider diversifying suppliers, and explore alternative markets to avoid the impact of U.S. regulations or tariffs.
• 🌐 There are ways around the changes, such as using U.S.-based warehouses or shipping from other countries to avoid U.S. tariffs and customs delays.

Q & A

What is the Drop Shipping model?

Drop shipping is an e-commerce business model where you set up an online store, but instead of holding inventory, you source products from a third-party supplier. When a customer orders, the supplier ships the product directly to the customer, eliminating the need for you to handle the product.

Why is the De Minimus Rule important for drop shippers?

The De Minimus Rule allows goods valued under $800 to enter the US without customs duties or taxes, which has been beneficial for drop shippers. This rule made it easier for businesses to import low-cost items from abroad without incurring additional costs like customs fees.

What changes are being proposed to the De Minimus Rule?

The US government plans to crack down on the De Minimus Rule by denying the exemption for goods covered by specific tariffs, increasing data requirements, and requiring certificates of compliance to prove products meet US safety standards.

Which types of products could be affected by the new customs duties under the proposed rule changes?

Products affected include electronics, furniture, textiles, apparel, solar panels, washing machines, aluminum, automobiles, and auto parts. These goods, if imported from certain countries, may face new customs duties and taxes.

How does the De Minimus Rule currently benefit large e-commerce businesses like Shein and Temu?

Shein and Temu, among other large e-commerce companies, benefit from the De Minimus Rule by shipping large volumes of products under $800 to the US without customers having to pay customs fees, which helps keep their prices low.

What is the main reason the US is cracking down on the De Minimus Rule?

The US is cracking down on the De Minimus Rule due to concerns over unfair trade practices, safety risks from counterfeit or dangerous products, and the increasing volume of imports that have overwhelmed US Customs and Border Protection.

What are the three major changes to the De Minimus Rule that could affect drop shippers?

The three major changes are: 1) Denial of the De Minimus exemption for goods covered by certain tariffs (such as electronics and textiles). 2) Increased data requirements, such as the need for a 10-digit tariff code. 3) A new certificate of compliance requirement to prove products meet US safety standards.

How might the proposed changes to the De Minimus Rule impact drop shippers financially?

Drop shippers may face higher import costs if the exemption is denied for products covered by certain tariffs. Additionally, there will be more documentation and compliance requirements, which could increase operational costs.

How will the new data requirements affect drop shippers?

Drop shippers will need to provide additional information, such as a 10-digit tariff code and the identity of the party claiming the exemption. This could complicate the process, but it's expected that suppliers, like those on AliExpress, will handle most of this on behalf of the drop shippers.

What steps can drop shippers take to mitigate the impact of the new regulations?

Drop shippers can remain calm and adaptable. They should consider diversifying suppliers, using US-based suppliers or warehouses to avoid international shipping issues, focusing on high-value products to offset potential cost increases, and expanding into markets outside the US.