He bought a side table from Mexico. Tariffs added a surprise $1,170 fee at delivery Sometimes, that process is less subtle
Businesses typically pass tariff costs onto consumers through higher prices
As President Donald Trump continues to set aggressive new tariff rates on imports, U.S. consumers are feeling the effects on their wallets.
Tariffs are taxes on imported goods paid by the entity importing those products. Businesses often pass the cost of tariffs along to consumers through higher prices.
Sometimes, it's not so subtle.
In June, Dave Yeske, a certified financial planner in San Francisco, California, bought a side table from a seller in Mexico through an online marketplace for antiques. Before UPS would deliver the disassembled table in July, the delivery company required Yeske and his wife to pay about $585 in U.S. Customs and Border Protection fees for each of the two boxes — around $1,170 in all, on a side table that already cost roughly $1,980.
"We were very disappointed," said Yeske, who is the managing director of Yeske Buie, a wealth management firm in San Francisco, California. "We know that tariffs show in prices no matter what, but this was like the most explicit thing imaginable."
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Assessed fees are set by the U.S. government, and not by the carrier, according to a UPS spokesperson. Those fees depend on the value of the product and its origin.
When UPS brings in a shipment into the U.S., the delivery company becomes the importer of record, meaning the company is responsible for the duties, taxes and fees associated with the delivery. The retailer can choose to pay the fees, or pass the cost on to the end consumer, the spokesperson said.
Yeske's experience is not uncommon. After Trump's first round of tariffs were implemented this spring, consumers began reporting that they received payment requests from carrier companies after a purchase in order to receive their shipments. Experts also warned of scams mimicking those legitimate requests.
While consumers have long faced duties, taxes and fees on imported purchases, Trump's tariffs are exacerbating the issue, according to Bernie Hart, vice president of customs of Flexport, a logistics firm.
"In today's world, the dollar amount is too big to not pass it on or to not look for recovery," he said.
If you plan to order products from overseas, here's what to keep in mind, according to experts.
How tariffs make costs rise
Trump's trade policy has included threatening countries with high tariffs, and then changing his stance soon after, as a negotiating tactic with other nations.
Trump announced a 50% tariff on copper imports on Tuesday, and soon after said that will take effect on Aug. 1. That followed his Monday announcement that at least 14 countries' imports are set to face high tariff rates starting Aug. 1.
Early in the year, Trump imposed a 25% tariff on all imports from Mexico and Canada. The levies went into effect on March 4, but were then paused on March 6 on products that qualify under the United States-Mexico-Canada Agreement, a trade deal that allows certain goods to enter the U.S. with fewer or no duties.
The president signed the USMCA in 2020 during his first term. Now, products that do not qualify under the USMCA face a 25% tariff rate.
Tariffs will make the cost of many everyday products rise. According to a July 10 report by the Budget Lab at Yale University, tariffs could cost an average $2,400 per household in 2025.
Levies have also added to uncertainty in the economy, leaving the Federal Reserve reluctant to lower its benchmark rate. The Fed has held interest rates steady at 4.25%-4.5% since December.
While that federal funds rate sets what banks charge each other for overnight lending, it also directly impacts borrowing and savings rates for Americans. In fact, the bank's inaction on rates has kept credit card rates near record highs.
Federal Reserve Chair Jerome Powell said in a panel in early July that the central bank would have cut rates this year if not for the president's tariff plan.
Overall, tariffs are adding to consumers' expenses while also creating a headwind for their efforts to pay down debt.
'All the hallmarks of legitimacy'
How levies materialize in online orders will depend on where the product is being shipped from, said Bernie Hart, vice president of customs of Flexport, a logistics firm.
If you order a product and it's already in a warehouse or distribution center in the U.S., you will probably not get hit with import-related duties, taxes or fees, said Hart.
"It's just when you order internationally, and you don't really know this when you're on a website," he said.
If the product is coming from abroad and you do get hit with a tariff payment request, it might be real. As noted above, the U.S. Customs and Border Protection will sometimes charge consumers a processing fee in order to release an imported good.
However, scammers are also aware that many consumers are unfamiliar with the ever-changing landscape of tariffs, and will use it to their advantage, experts say. Fraud attempts may appear in the form of a "tariff payment request" text or email claiming to be from a retailer, delivery company or a government agency.
In Yeske's experience, he said he had "all of the hallmarks of legitimacy," with the request coming from a UPS delivery driver who routinely made deliveries to his apartment building.
"I had to make the checks out to UPS, so this is not a scammer," he said. "It was a check made out to UPS given to a UPS delivery driver who had actually delivered a UPS box."
'Start with a suspicious state of mind'
If you receive an email or text message that says your upcoming delivery requires a tariff payment before it arrives, "start with a suspicious state of mind," CFP Yeske said.
"Taking a beat, taking a breath to figure this out is not going to be a problem," he said.
Instead of immediately paying the charge, make sure the payment request is real and is coming from a legitimate company or delivery service, he said.
For instance, instead of clicking through any links the sender provided, go to the company's website or call the entity's verified number to corroborate the charge.
You can also check if the request includes the form 7501, an official government document detailing the import, said Hart.
If you realize it is a legit charge, "you could just refuse delivery," Yeske said, but "you're then going to have to recover the original cost of the product, which is maybe the tricky part."
Hart said that in that scenario, you're going to encounter the seller's return policy, on top of the carrier looking for their reimbursement as well.
"You really need to understand what that return policy is and what your liability is in that," he said. You may or may not get all your money back. Some returns can incur a restocking fee, return shipping fee or other logistics costs.
"Those costs can be substantial," Hart said.
This story originally appeared on: CNBC - Author:Ana Teresa Solá
