Today, two European customers refused deliveries from us.
One had ordered $136.26 of products. FedEx asked for approximately €200, about $215, for customs clearance. The customer told us the charge was “multiple of the order amount” and that they could not accept the shipment.
Another customer was asked by UPS for €40, about $43, in customs duties and brokerage fees on a small programming cable. He then realized he also needed one of our mating adapters and quite reasonably concluded that paying customs and brokerage charges twice made no financial sense. He refused the first package, which is now coming back to us.
So, in one day, two customers using two different carriers refused our products because of customs and clearance costs. One of them actually wanted to buy more from us, but instead sent his first purchase back across the Atlantic.
This is international trade policy working against international trade.
Tag-Connect is a small American manufacturer. We design and manufacture specialized programming and debugging cables used by engineers and manufacturers around the world. We employ people in California and export our products worldwide. We are exactly the sort of business governments routinely say they want to encourage.
Yet an extraordinary amount of our time is now consumed not inventing things, making products or helping customers, but trying to survive an increasingly chaotic international trade and shipping system.
Tariffs are one thing. We may strongly disagree with a tax, but at least a known tax can be calculated and planned for. In April 2025, the rapidly changing tariff announcements left us facing potential additional duties approaching 170% on parts we imported from China, including the existing 25% Section 301 tariff.
Our response was to establish part of our production process with contractors in Okinawa, Japan. Think about that for a moment. A tariff policy intended to strengthen American manufacturing caused a small American manufacturer to move part of its production process to Japan. It was not a political statement or a tax strategy; it was a survival decision.
Unlike many businesses, Tag-Connect did not add a tariff surcharge to our customers’ orders. We absorbed the cost. That decision may now prove fortunate as tariff refunds are being considered and processed, raising difficult questions for businesses that separately passed tariff costs on to their customers.
We have no tariff surcharges to unwind. We paid the tariffs ourselves. Yet despite filing dispute after dispute over tariffs incorrectly charged to us, we have not seen even $0.01 returned. Not one cent.
The problem goes far beyond tariff rates. We carefully provide HS tariff codes and accurate product information, yet those codes are routinely ignored or overridden during customs clearance. Our products are reclassified in ways that attract dramatically higher tariffs. From our experience, the clearance process often seems to look for the highest applicable tariff rather than use the accurate classification and information we provide.
We are charged for this clearance work. The resulting duties and tariffs are then taken from our automatically paid carrier accounts, leaving us to discover the error, investigate it, provide the evidence and file a dispute. We have even been charged thousands of dollars in late fees for non-payment of duties and taxes that were themselves incorrectly applied.
The carrier takes the money first. The small business gets a dispute process.
For years, when duties or taxes were due on our imports, the process was simple. The carrier invoiced our automatically paid account and we paid. Recently, our suppliers began receiving notices saying Tag-Connect had “refused to pay” duties and taxes.
We had refused nothing. We had not even been asked to pay. The normal billing process simply had not happened.
We now see a similar failure with shipments to our customers. A customer may owe $6 in VAT. Instead of collecting the $6 from the customer, FedEx rebills the VAT to us and adds a $55 rebill fee. Six dollars of customer VAT becomes an invoice to us for more than $60.
We did not refer the charge to FedEx or ask FedEx to assume our customer’s tax. What was once a rare occurrence, when a courier genuinely could not collect duties and taxes from a customer, has turned into multiple instances a week. From the pattern we are seeing, it is increasingly difficult to believe that meaningful attempts are being made to collect these small amounts before they are rebilled to us with a $55 fee attached.
Shipping charges themselves have become another battle. We routinely ship products in small 7 × 5 × 3 inch packages. UPS, FedEx and DHL now all routinely “audit” our packages and add dimensional weight adjustments. The same boxes somehow acquire different dimensions during carrier audits and we are charged more. Once again, the money is taken first and it is up to us to find the adjustment and dispute it.
We recently paid an extraordinary price for FedEx overnight delivery. The shipment arrived late, so we tried to request a billing correction and discovered that FedEx had inserted a clause into our pricing agreement removing our right to seek billing corrections for late service.
We paid for overnight delivery. FedEx did not provide overnight delivery, and we had apparently signed away our right to ask for the price to be corrected when the service we purchased was not provided.
Now the European Union has ended its de minimis duty exemption for low-value imports. Beginning July 1, affected low-value imports face new duties and new mandatory product identifier requirements.
We learned about the change on June 28.
FedEx warned us that three product identifiers should be provided for every affected product to avoid delays and disruption during customs clearance. Full enforcement may not begin until November, but we cannot knowingly send dozens of packages a day into customs without data the carriers have warned us is needed for smooth clearance.
The problem is where to put it. Our shipping software does not provide fields for the three product-level identifiers. We initially tried adding the identifiers to each customs description. UPS allows so little space for the description that doing so severely compromised our ability to accurately describe the product itself.
So we asked UPS where the fields were. We were first directed toward WorldShip and a future software update. But we do not use WorldShip for our daily shipping. Processing our volume that way would require dramatically more shipping staff. UPS then told us the necessary fields already existed in its ShipAPI and gave us the exact API paths. Except the fields we were given were not the three product identifiers we had asked about. They identified whether the shipper and consignee were a business or consumer. Days after the rules took effect, we were still trying to establish where the three product identifiers could actually be entered.
Our current solution is one we devised ourselves. We are preparing a separate supplemental customs document explaining that Tag-Connect is both the merchant and manufacturer, that the SKU already shown for each product is both its Merchant Product Identifier and its Non-standardized Manufacturer Product Identifier, and that our products have no Standardized Manufacturer Product Identifier. We will manually upload this additional document with affected shipments.
We ship as many as 40 to 60 international packages a day. The carriers tell us the information is required to avoid delays and customs holds.
The shipping software available to us gives us no apparent way to transmit it correctly. So we are creating our own document and manually attaching it to packages.
This is insane.
The people creating these rules may imagine enormous marketplaces shipping millions of cheap consumer products around the world, but the rules do not stop there. They reach a small manufacturer in California shipping a specialized cable to an engineer or manufacturer in Europe who needs it to program a circuit board.
Every new requirement passes through governments, customs authorities, carriers, brokers and shipping software companies. Each sends us another notice explaining what we must now do, but too often nobody has built the systems that allow us to actually do it. The small business is left at the bottom, expected to somehow make all the incompatible pieces work.
So what are we supposed to do?
We could use a fulfillment center in Europe, importing inventory in bulk and shipping customer orders locally. We have used outsourced fulfillment before, although in the United States, and our experience was extraordinarily dependent on the individual employee handling our products. One person was excellent. Another sent boxloads of our products to the wrong country, at our cost.
A European fulfillment center might solve the customs problem for individual shipments, but it would add another company, another system, inventory thousands of miles away and another critical operation we have to trust someone else to perform correctly. It would also take considerable time and money to establish.
We could push more of our sales through large distributors. They already have the international infrastructure, but they also take around 25% of the selling price. For a small manufacturer, that can be most of the profit on the sale.
Or we can move to Delivered Duty Paid shipping and take responsibility for the same customs charges and carrier billing systems we already spend so much time disputing.
None of these options makes our products better or helps us invent anything. None creates a better cable for an engineer or manufacturer. They simply move more of the value of what we make into the machinery required to get it from us to our customer.
This is no longer simply taxation. It is friction being deliberately introduced into international trade, with small businesses expected to absorb the cost and labor of making broken systems function.
An incorrectly applied tariff is our dispute to file. A package grows during a dimensional audit and it is our dispute to file. A carrier fails to collect $6 and it becomes our $61 invoice. An overnight shipment arrives late and our contract says we surrendered the right to a billing correction. Today, a customer bought $136.26 of products and was asked for approximately €200 to receive them.
For a multinational corporation, this may be compliance overhead. For a small manufacturer, it is another person we cannot hire to make products, another product we do not have time to develop, and another day the owner spends fighting shipping invoices instead of running the company.
Small businesses are not acceptable collateral damage in a trade war, a regulatory campaign or an automated carrier billing system. We employ people, invent things and manufacture things. We sell them to engineers and manufacturers around the world who genuinely need them.
Please stop making that nearly impossible.
Neil Sherman, President of Tag-Connect
