Tariff Loophole Helping to Propel Tremendous E-Commerce Growth in Seattle

CEO of DHL Express U.S. says Seattle is benefiting from the loophole because it’s a “real hotbed’ for e-commerce
Updated: Wed, 11/13/2019 - 11:01
 
 
  • CEO of DHL Express U.S. says Seattle is benefiting from the loophole because it’s a “real hotbed’ for e-commerce

Global logistics company DHL Express’ shipping volume in Seattle is up 14% year over year as of this past September, despite the impact of the tariff battle between the U.S. and China, says the company’s U.S. chief executive officer, Greg Hewitt

A big driver of that growth, Hewitt says, is e-commerce.

“We’re seeing, with a very strong U.S. dollar, a rise in e-commerce deliveries into the U S, which is now up to more than 60% of my delivery volume,” says Hewitt, who is based at DHL’s U.S. headquarters in Plantation, Florida, near Fort Lauderdale. Bonn, Germany-based DHL, which employs 125 people in Seattle, operates two distribution facilities and has three freighter aircraft that serve the city as well as a fleet of some 70 trucks.

“What we've seen is a decrease in more traditional business-to-business traffic and larger shipments coming in from Asia replaced by more shipments going direct to consumers, and Seattle is a real hot bed for that e-commerce,” Hewitt says.

Helping to drive the increase in e-commerce is a little-known loophole in U.S. tariff regulations known as the “de minimis value,” which was raised from $200 to $800 in 2016 via legislation signed into law by then-President Obama. Merchandise shipments valued at or below the $800 de minimis threshold can generally be imported free of duties and taxes, according to U.S. Customs and Border Protection.

A recent investigation by the news service ProPublica discovered that a growing volume of international trade is now being delivered on pallets to fulfillment warehouses in Canada and Mexico, instead of the U.S., and then individually packaged and sent via delivery services across the border directly to buyers ― thereby avoiding tariffs because the value of those individual shipments is under the di minimis threshold.

“I would say that the tariffs are hitting some sectors harder than others,” Hewitt says. “So, engineering and manufacturing as a sector, and oil and gas to a degree as a sector, for example, they are really dependent more on steel and aluminum, which were kind of the first sets of tariffs.

“E-commerce, because most of those are individual orders coming to buyers in the U S under the di minimis, they can come into the country without the tariffs impacting them.” he adds.

Hewitt says industries that are key to Seattle’s economy, like aerospace and technology, are being impacted by tariffs, but he adds that Seattle’s booming economy is helping to offset the drag of the tariffs.

“Seattle’s has booming international trade, so it [shipping volume] continues to grow, despite the tariffs,” Hewitt says.

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