Shipping to the USA Has Been Suspended
Due to recent changes in U.S. import regulations, which now require pre-payment of all import duties by the shipper before the watch is delivered to the customer, we are no longer able to ship watches from our testing center in Japan to our U.S. customers. Our sincere apologies for any inconvenience or annoyance this may cause our loyal long-term U.S. based customers. Believe us when we tell you that we feel this very keenly too. The situation has severely impacted our ability to conduct business as currently all of our stock is in Japan, since we test each new watch right before shipping, and being a U.S. corporation, approximately 85% of our sales until now have gone to our U.S. customers.
As soon as this new regulation reverts back to how things were before, so as to match every other country where import duties can be paid by the recipient when the watch arrives in the country, we'll be able to reinstate shipping to the U.S. Our shipping service to all other countries remains unaffected. When things get back to normal, we'll be sure to send out a newsletter to all of our newsletter subscribers to let them know that U.S. shipping has resumed.
Why Pre-Payment of U.S. Import Duties is An Issue
For the simplified example behind this explanation, please note that the following real-world tariffs have been used, but they may not be up-to-date or reflect current U.S. import tariffs:- 0% for Singaporean Imports
- 15% for Swiss Imports
- 30% for Chinese Imports
The Microbrand Store™ uses Shopify, the world's largest online store platform, to fulfill all of our online orders. Shopify does have a method to collect import duties from customers, which you'd think we could use. However this method is based on the country of origin for the entire completed product. For example, if the watch is assembled in Singapore using parts from various countries, such as a Swiss mechanical movement, (the most expensive part,) and a Chinese steel case, then one could say the country of origin for the completed watch is Singapore, based on the assembly. Lets say the customer paid $1,000 USD for the watch, Shopify would add $0 in import duty because the country of origin of the completed product is Singapore. This works great for most U.S. products, but sadly not for watches.
The U.S. has the world's craziest system for calculating import duty on watches. It's not based just on the country of origin of the completed product, but instead is based upon the parts of the watch, each part's type and country of origin and their individual values for customs duties or tariffs. We have to specify details about the movement such as the country of origin, size, number of jewels, if it's an automatic etc. as well as the movement's price, and details on the case material, country of origin, case price, etc. and so on. We only have to do this for the movement, case, case back and straps, but the rest of the watch is calculated based upon the highest percentage part. Thus at the end of the day in our example, although our customer would've paid us nothing for import duties, we end up footing a bill which includes 15% for the movement, and 30% for the case and all other parts not listed.
We have to provide documentation with a parts breakdown with each shipment. There are ways around this issue of course, such as blatantly lying and putting the country of origin of all parts to be "Singapore" in our example so we can match the import duty that Shopify calculates. We're sure that many watch retailers shipping to the U.S. do this by declaring all parts to be the same country for convenience. However, ethics is one of the cornerstones of our business, so we are not going to follow suite, even if this severely impacts us. We are also a U.S. corporation shipping to the U.S. with 100% U.S. ownership, and not an overseas entity that doesn't have a U.S. presence. One should also keep in mind that tax evasion in the U.S. is highly illegal and can come with huge penalties, not to mention that customs can seize goods and now impose fines of $1,000 per shipment for incorrect declarations.
If the U.S. does away with it's crazy watch parts breakdown, and just goes with one percentage for the entire product based upon one country of origin, then we can start charging our U.S. customers import duty in Shopify. If the U.S. goes back to allowing payment of import duty by the receiver, like the rest of the planet, then this problem goes away too. Many businesses have been affected by these recent regulation changes, not just us, including a number of microbrands that no longer ship to the U.S. A very sad state of affairs indeed, and one we'll continue to monitor very closely.