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No more cheap tat from China for Americans?

One of the things that has driven the charge of cheap Chinese tat online has been the lure of free shipping.

How can it be that you can buy something from a Chinese etailer and have it delivered to your door for free?

If the item costs $1,000 you can perhaps understand that the price of shipping is built into the price charged but what about all those $1 trinkets that they'll ship for free?

If you've ever tried sending a simple letter or Postcard to China you'll realise that the true cost of postage is far more than the price the Chinese charge for that little $1 piece of tat. When I checked this morning it costs NZ$3.30 to send a postcard to China and $4.30 to send a regular letter.

So how do the Chinese do it and why is the era of the "free shipping" from China perhaps about to come to an end?

Well I've written about this before but China has been exploiting the way the international postal system was set up many years ago.

The way international mail transfers are set up is that the sender pays for the cost of getting the mail to the destination country but then that country has to deliver the items without further charge to the sender. This has worked for a very long time to ensure stable prices and a fair division of cost between sending and receiving nations. Since the flow of mail has traditionally been two-way, the costs effectively balance out and nations have added a small extra charge for outgoing mail to cover the cost of delivering the incoming stuff.

Unfortunately, now that China sends far more mail than it receives, the Chinese government has been subsidising the sending of mail and receiving nations have been left with the burden of delivering those items to the recipients. Since very few packages travel the other way, this has imposed significant costs on the postal systems of all those other nations.

It looks as if the US government has decided that they need to recover some of this cost without burdening those who send mail from the USA so they're looking at cancelling an tax exemption that has also existed for many years that allowed packages worth less than US$800 to be free of sales taxes and import fees when coming into the country by mail.

This is pretty much the way New Zealand operates, where items under NZ$400 are not hit with GST as they enter the country because the cost of collection is deemed to be higher than the value of that tax anyway. The NZ government was sneaky and demanded that all those Sino-exporters levy GST at the point of sale anyway and I've been utterly surprised at just how many have complied, given that they have no legal obligation to do so.

Biden's government is closing the tax-free loophole with the excuse that too much of the nation's fentanyl problem stems from direct imports that evade detection because they're never inspected at the border. The reality is almost certainly different.

This appears to me to be just the latest move in what has become a program to aid US domestic manufacturers by building tariff walls against imports, especially those from China. It's also a clever measure designed to mitigate the effects of the international postal treaty that leaves them with their hands tied over delivery costs of all that cheap tat.

As usual, the US government fails to be open and honest about the real reasons for the change.

A bill passing through the US legal system right now intends to ban drones made by Chinese giant DJI but instead of admitting that this ban is the only way domestic manufacturers can compete, the administration are claiming that those drones are spying on critical infrastructure and that it's simply "security" that is driving the ban.

Let's also not forget that Chinese-made EVs now have a 100 percent tariff imposed on them by the US government.

I guess the USA has "adjusted" its definition of capitalism a little. Now "innovation" has been replaced by "legislation" when it comes to ensuring that its businesses are able to thrive and grow rich.

Carpe Diem folks!

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