WSJ Your Money Briefing - How You Can Get Around Trump’s Tariffs When Traveling Abroad

Episode Date: April 24, 2025

One way to avoid paying President Trump’s tariffs on imports is to buy those items when vacationing overseas. But there are many rules to navigate to be successful. Wall Street Journal reporter Allison Pohle joins host Janna Herron to explain the ins and outs of sidestepping those duties. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Visit pcfinancial.ca for details. Here's your money briefing for Thursday, April 24th. I'm Jana Herron for The Wall Street Journal. The White House's tariffs are about to make a ton of imported goods a lot more expensive for Americans to buy here. But savvy travelers could get around some of those additional costs by buying while abroad. But if you're bringing back bottles of wine from Europe, for example, you're allowed

to bring one liter back duty free and then you're going to pay a flat rate duty tax on the rest of the bottles. We'll talk with Wall Street Journal reporter Alison Pauley about the rules and when they apply to your purchases overseas. That's after the break. Okay, Martin, let's try one. Remember, big. You got it. The Ford It's a Big Deal event is on. How's that?

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or Ford.ca today. American shoppers may be concerned about their budgets with President Trump's trade war expected to send prices higher on imported goods. Could buying these items while traveling abroad be one way around paying those additional taxes? WSJ reporter Allison Pooley joins me to break this down. Allison, let's start with where we are with tariffs right now. What kind of extra costs are we looking at for those imported goods? Right now there's a 10% import tariff across the board for most countries,

and so that's already gone into place. But starting May 2nd, there will be a change to goods that are imported from China and Hong Kong. So we already know that China is seeing way more tariffs than 10%. But an exemption will go away. That's been in effect. So that exemption is called de minimis. And it meant that goods under $800 did not have to go through extra

customs inspections and those were not subject to tariffs. But that's changing starting May 2nd. For those of us traveling abroad this summer, do you have to pay that 10% tariff or even that 145% one in China on the stuff that you buy and bring back home? Typically, no. When you come back through customs, if you bought, let's say, clothes or skincare items or different things you want to stock up on, you're not going to be hit with a 10% tariff at customs. So that's because these items are for personal use. So there are exemptions for things that you keep and consume yourself that don't enter the commerce of the US. Like the imports are charged because they're part of our commerce where they're bought and sold.

And are there any restrictions on that? Or can I just take three or four extra suitcases, fill them up with all the stuff, beauty products or whatever and bring them home and we're all good? It's not quite that simple. So there are restrictions. So for most countries, the limit on goods is going to be $800. There are some exemptions where, for example, if you went to the U.S. Virgin Islands or to Guam, you could

take $1,600 worth of goods back. But let's say in this example, you're going to Europe for a vacation. So the limit's going to be $800, and you can only use that exemption every 31 days. So if you're traveling across the border multiple times, you can't go and come back and keep claiming the exemption. You can only use it essentially once a month. And if I'm in Europe and I bring back, say, more than the $800 worth of items, what happens then? So you would say, I have $1,000 worth of items. You would not need to pay a duty on the first 800 of them.

But you might have to pay a flat rate duty of at least 3% on the other $200 worth of items. So basically, those would be subject to a flat rate charge because it was over the $800 limit. Now, there are tons of exceptions to this rule. Basically, if people want to know what they are, it's best to just go to the Customs and Border Protection website.

They outline all the different use cases and scenarios when you might be subject to that duty. And so then also when you're abroad, there are other taxes that you might face that comes into this math of, should I be buying stuff abroad to save money on tariffs? One being the VAT. So can you tell me a little bit about the VAT and if there's any way around that? So what the VAT is, is a value added tax, and it's a charge that's assessed to the value added to the product at each

stage of production. And so each time it moves through the manufacturing or supply chain, the value is assessed and a charge is added. So the consumer ultimately is the one who pays the VAT. But for American travelers who are abroad, you can get a refund on the VAT. Let's say you're at Hermes and you're buying a handbag. You would need to have the hard copy of your passport with you, and the clerk would need to fill out a form.

And then you go take that receipt to a processing place at the airport before you board your flight. So it's really important to do that before you go through customs at the airport. But basically you can get a refund back. In Europe, the VAT is at least 15%. So you could be getting a significant amount of money back. Of course, the processing company will take a cut of that,

but still you're getting a discount. I read in your article, which is linked in our show notes, about some restrictions on alcohol, for example. What should people be aware of? Yeah, so you can't ship alcohol, so you can't go somewhere and ship a bunch of alcohol back to the U.S. But you can carry it back through with you. So you're allowed to bring one liter of alcohol back duty-free. You do have to pay duty on additional bottles unless they're from a certain number of countries.

Those are primarily in the Caribbean. But if you're bringing back bottles of wine from Europe, for example, you're allowed to bring one liter back duty-free and then you're going to pay a flat rate duty tax on the rest of the bottles. Before we end here, I wanted to know if there are any other factors that people should be thinking about, such as like a weakening dollar or even like the extra cost of a carry-on bag when doing the tariff math. The dollar is still strong compared to the Canadian dollar, but it is weakening. So you really need to think about the conversion rate, especially when it comes to whether you can buy

these things online. De minimis still does exist for items from countries that are not Hong Kong and China. So if you're buying it online, it's less than $800. It's possible it's going to be subject to the broader tariff that's in place, but maybe the company isn't passing on those tariffs to the consumer yet. For items that are exclusively available in those countries, like souvenirs or things like that, it always makes sense to buy it there as opposed to trying to deal with shipping it abroad.

But just check the price online before you check out of the store. It's possible that it could be cheaper back home and it's really going to be based on the value of the dollar or other things that are going on geopolitically. Like it might not be that much more expensive if you're buying it back in the US. That's WSJ reporter Alison Poley, and that's it for your money briefing. This episode was produced by Ariana Asperu with supervising producer Melanie Roy. I'm Jana Heron for The Wall Street Journal. Thanks for listening.