India suspends postal services to US amid Trump tariff war

Amid a raging tariff war, the Department of Posts has decided to temporarily suspend booking of all types of postal articles destined for the US with effect from August 25.

However, services will continue for letters, documents and gift items worth up to $100. The exempt categories would continue to be accepted and despatched to the US subject to further clarifications, the Ministry of Communication said in an order.

Customers whose had already booked articles but these couldn’t be dispatched to the US due to prevailing circumstances may seek a refund of postage, the ministry said.

The decision by the Department of Posts has been taken following an executive order issued by the US administration on July 30 under which duty-free exemption for goods valued up to $800 was withdrawn with effect from August 29.

All international postal items destined for the US, regardless of their value, shall be subject to customs duties as per the country-specific International Emergency Economic Power Act (IEEPA) tariff framework, the ministry said.

As per the US decision, transport carriers delivering shipments through the international postal network, or other ‘qualified parties’ approved by the US Customs and Border Protection (CBP), were required to collect and remit duties on postal shipments.

While the CBP issued certain guidelines on August 15, several critical processes relating to the designation of “qualified parties” and mechanisms for duty collection and remittance remain undefined. Consequently, US-bound air carriers have expressed their inability to accept postal consignments after August 25, citing lack of operational and technical readiness.

“In view of the above, the Department of Posts has decided to temporarily suspend booking of all types of postal articles, destined for the US with effect from August 25 except letters, documents and gift items up to $100 in value. These exempt categories will continue to be accepted and conveyed to the USA, subject to further clarifications from CBP and USPS," the order said.

The department was closely monitoring the evolving situation in coordination with all stakeholders and every effort was being made to normalise services at the earliest possible opportunity, it added.

Economic think tank GTRI founder Ajay Srivastava said under the new regime rolled out by the US, all inbound parcels will attract tariffs, but international postal shipments remain duty-free until the CBP establishes a new entry process and publishes it. After the implementation of new norms, shipments will face one of two duty structures--ad valorem duty based on the effective tariff rate under IEEPA, or a flat rate duty of USD 80, USD 160, or USD 200 per item, depending on the country's tariff bracket.

"The suspension underscores the immediate fallout of Washington's new trade measures, which are expected to disrupt global e-commerce and hit exporters in India and other countries that depended on small-value, duty-free shipping," Srivastava said.