Here is the founder question: "We do £3m in the UK. Our US traffic keeps growing and people keep telling us to launch on Amazon.com. Is now a good time, and what does it actually cost to get it wrong?" Here is the direct answer: the US is a real opportunity, but the duty-free test route ended in August 2025. The de minimis exemption that let qualifying small parcels into the US free of duty was suspended for the whole world on 29 August 2025, so commercial shipments now go through customs clearance and are subject to any duty, tax and fees that apply. A US launch is still worth doing. It is just no longer a side door. It is a second business with its own tax, duty and cash cycle.
I spend my days on marketplace margin for UK brands, and cross-border expansion is where I see the most expensive optimism. Here is the honest version, worked with numbers you can rerun.
Here's the Short Version
- De minimis is gone. Since 29 August 2025, ordinary commercial shipments into the US need customs entry and are subject to any duty, tax and fees that apply, whatever their value
- Duty stacks: US import duty plus any China-origin tariffs if your stock is made there, then Amazon.com fees on top
- The US has no VAT. It has state sales tax, and marketplace facilitator rules generally require Amazon and TikTok Shop US to collect it on facilitated sales, though registration and filing obligations can still land on you; your own DTC store is the fuller admin
- Put stock in the US and it usually creates sales tax nexus in that state, and it raises a taxable presence question, which is why the structural decisions (ship from the UK, ship from a US warehouse, or form a US entity) matter more than the launch itself
- A US entity comes with US filings: a 25% foreign-owned company files Form 5472 when the rules are met, and the initial penalty for a missed filing is 25,000 dollars per failure
- On the UK side, exports are zero rated for VAT, and profits taxed in the US usually get relief in the UK under the treaty, but only if the paperwork lines up
- Run the landed-cost maths before the logo goes on the US site. If the margin survives duty, fees and returns, the market is real. If it only survives on the old de minimis maths, it never existed
What Changed: The De Minimis Era Is Over
For years the US let parcels worth 800 dollars or less enter duty free under Section 321, the de minimis rule. UK brands built test-and-learn playbooks on it: ship light, sell a few hundred orders, learn cheaply, scale later. That door closed. The exemption was suspended for China and Hong Kong in 2025 and then suspended globally from 29 August 2025, and the suspension has since been continued indefinitely. Ordinary commercial shipments now go through a customs entry process whatever their value, and stay exposed to duty even where the rate comes out at zero.
What that means in practice: the first parcel you send is now a customs event, not a postage stamp. You need accurate classification on the US Harmonized Tariff Schedule and a compliant customs entry, and you can appoint a customs broker or use a carrier or platform service for it, though an importer is not generally required to use a broker. If your product is manufactured in China, the tariffs that apply to Chinese origin goods stack on top of the base duty rate. On a thin-margin product that duty line can be the difference between a viable US price and a rework of the whole plan.
The old advice to "just test it with a small shipment" now carries entry costs and duty exposure. You can still test. You cannot test for free.
Duty First, Because It Sets the Ceiling
Build the US landed cost exactly like you would for the UK, with one extra layer. Start with the product price, add freight and insurance to the US, then calculate US import duty on the customs value, which normally excludes separately identified international freight and insurance. Then add any China-origin tariff that applies, then the clearing fees charged per entry. Only then do you get to Amazon's fees.
Here is the illustrative example. A UK brand sells a product at 60 dollars retail on Amazon.com. The customs value is 22 dollars (the same pre-duty cost used in the contribution calculation below), the applicable US duty on the code is an illustrative 6%, and a China-origin additional tariff of 7.5% is assumed for the example. Duty and the additional tariff add 13.5% of 22 dollars, about 2.97 dollars a unit. Amazon's referral fee at 15% takes 9 dollars. FBA fulfilment for a mid-size parcel lands around 5.50 dollars. That leaves roughly 20.53 dollars of contribution before advertising and returns, on a 60 dollar sale, about 34%. Removing only the US duty layer takes contribution to 23.50 dollars. That is not a general UK comparison, because UK duty and VAT depend on the product and the supply chain; it isolates the US duty line. The US version of the product still has to earn its keep from a standing start of about 3 dollars a unit less.
None of that is a reason not to go. It is a reason to price for the US channel rather than repricing your UK page and hoping. If the 3 dollar gap means the US only works at 69.99, then the US price is 69.99.
Sales Tax Is Not VAT, and That Is Good News
First the relief: there is no US VAT. The US runs a state-level sales tax, and it is collected by the seller on sales into states where the seller has nexus. US sales-tax jurisdictions generally require large marketplace facilitators such as Amazon, Walmart and TikTok Shop to collect and remit tax on facilitated sales. That shifts the collection, but it does not remove every seller obligation: registration, returns and other state filings may still be required, and the states with no statewide sales tax are a different picture.
Your own store is the part that stays fully yours. Shopify sales into the US need sales tax handled where you have nexus, and nexus is created by economic thresholds or physical presence. Economic nexus is commonly triggered around 100,000 dollars of sales into a state, though thresholds vary widely (California, Texas and New York sit at 500,000 dollars), and some states still apply a transaction-count test alongside or instead. Physical presence is the one that catches UK brands out: US inventory usually creates physical-presence nexus in the state where it is held, including stock at many 3PL and FBA locations, so check each state. Selling from the UK with no US stock is a different, and much simpler, compliance picture from shipping a pallet to a US fulfilment centre.
Two consequences worth saying out loud. First, register for sales tax in the states where you actually cross the line, not all fifty. Second, if you are marketplace-first, hold that simplicity dear, while still checking what your own position requires. Your own DTC store in the US is where the fuller sales tax admin arrives; the marketplace carries much less of it.
The IRS Side: Filings You Cannot See Coming
If you form a US entity, or your UK company trades in the US in a way that creates a taxable presence, filings arrive whether or not you profit. The big one for foreign-owned structures: a US corporation that is at least 25% foreign owned files Form 5472 for a year in which it has a reportable transaction, attached to its income tax return; a wholly foreign-owned disregarded entity files Form 5472 with a pro forma Form 1120 when required. Formation, owner funding and distributions can trigger reporting even before the business starts trading. The initial penalty is 25,000 dollars for each failure to file a complete and timely Form 5472, with further 25,000 dollar penalties for each 30-day period after IRS notice when the failure continues beyond 90 days. It is the single most common cross-border compliance miss I see on this side of the Atlantic.
Even without a US entity, trading into the US brings forms. A UK company selling through a US platform will usually complete the platform's tax interview and may provide Form W-8BEN-E to certify its foreign status or claim treaty benefits where relevant; an EIN is not universally required, and income that is effectively connected with a US trade or business can require Form W-8ECI instead.
A US entity's federal filing depends on its legal and tax classification. Where the UK company itself pays US tax on the same profits, UK foreign tax credit relief may be available subject to the treaty and UK limits, and tax paid by a separate US subsidiary is not automatically credited against the UK parent's Corporation Tax. That is why the numbers in the two jurisdictions have to be built from the same books rather than two sets of friendly estimates.
The structural question underneath all of this: do you trade into the US from your UK company, or do you set up a US entity? Trading from the UK is simpler to start and simpler to neglect: permanent establishment rules, VAT on your UK side and US filing thresholds all interact. A US entity is cleaner for scale, US banking and investor conversations, but it adds the 5472 regime, a US tax return, and transfer pricing discipline between the two companies. Neither is wrong. Choosing by accident is what gets expensive.
The UK Side: What Your Existing Company Still Owes
Three things stay true on the home side. Exports of goods from Great Britain can normally be zero rated for VAT once the export conditions and evidence deadlines are met, and a VAT-registered business can normally recover input VAT attributable to those taxable exports. Your UK company remains UK tax resident and keeps filing UK accounts and Corporation Tax returns covering worldwide profits. And where the same profits are taxed in the US and the UK, the UK-US double tax treaty framework allows relief, which is why the numbers in the two jurisdictions have to be built from the same books.
The sneaky one is permanent establishment. Send stock to a US warehouse and run the operation from the UK and you can, depending on the facts, create a US taxable presence even without a US entity. The treaty is the framework, not an immunity. This is the exact question to put to an adviser before the first pallet, not after the first IRS or state letter.
The Three Routes, and What Each One Commits You To
| Route | What you run | Compliance load | Best for |
|---|---|---|---|
| Ship from the UK per order | UK warehouse, cross-border parcels, duty paid per shipment | UK accounts plus customs entry, duty and carrier charges per shipment; no US stock nexus, though economic nexus can still build | Testing the market with real prices before committing stock |
| UK company, US stock | US 3PL or FBA inventory, UK books | Sales tax in stock states, PE questions, US filings if trading creates presence | Brands with proven demand who want FBA speed |
| US entity | US company, US bank, US tax returns | Federal and state filings depending on classification; Form 5472 where its rules are met; transfer pricing between related parties | Serious scale, investment or acquisition ambitions in the US |
The routes are not just admin preferences; they change the economics. Per-parcel shipping often carries higher freight and clearance costs per unit than consolidation, though the ad valorem duty rate is the same. Route two gets container-level economies but adds state tax and presence questions. Route three adds a second compliance machine that only pays for itself at real volume. We have written about the mirror image of this journey for EU brands entering the UK and Australian brands entering the UK, and the shape is always the same: the market is real, the admin decides the margin.
How to Decide, With Your Own Numbers
Before any launch decision, build one page with four numbers on it. One: landed cost per unit into the US, including duty, origin tariffs and clearing fees. Two: the contribution per unit after platform fees and fulfilment, at the price you would actually charge. Three: the sales tax and filing cost of the route you have chosen, as an annual number. Four: the working capital for US stock, because US FBA buyers expect Prime speed from day one.
If contribution is positive and the compliance cost is a rounding error against it, launch. If the compliance cost is a meaningful slice of contribution, go route one (ship from the UK) and let volume earn the upgrade. If the numbers only work with optimistic assumptions, they do not work. The US is the best ecommerce market in the world for the brands that price it properly, and an expensive education for the ones that copy their UK price list across.
FAQ
Is it still worth a UK brand selling into the US now that de minimis has ended?
Yes, for the right product economics. The end of de minimis removed the free-testing stage, not the market. Run the landed cost first: if contribution per unit survives US duty, any China-origin tariffs and Amazon fees at the price you would charge, the market works. If it only worked at parcel-scale costs, it was a de minimis illusion.
Do I need a US company to sell on Amazon.com?
No. Many UK companies sell into the US from the UK. But patterns matter: US stock, US staff or a dependent US operation can create a taxable presence, and a US entity brings its own filings (Form 5472 and a US return among them). The right structure is a numbers question, not a preference.
Do I have to collect US sales tax?
On facilitated marketplace sales, collection is generally shifted: US sales-tax jurisdictions require large marketplace facilitators such as Amazon, Walmart and TikTok Shop to collect and remit tax on the sales they facilitate, though registration, returns and other filings can still land on the seller. On your own DTC store, you register and collect in the states where you cross nexus thresholds (commonly around 100,000 dollars of sales, though thresholds vary by state) or where you hold inventory. That is why marketplace-first is the common launch route.
The Bottom Line
The US is not a bigger version of your UK store. It is a second market with its own duty regime, its own state-by-state tax logic and its own filings that arrive even in loss-making years. Since 29 August 2025 the duty-free test route is gone, which removed an advantage for qualifying low-value imports. It did not make shipping free before August 2025, and it does not predict how competitors will respond. Do the landed cost, pick a route deliberately, and get the filings designed before the first pallet, not after the first letter.
If you want us to run the US expansion numbers for your product range, duty, sales tax and all, that is the kind of work we do for UK brands regularly. We are specialist social commerce accountants working with UK ecommerce brands from 1m to 20m, and cross-border margin is one of our regular desks. Book a call and we will build the US case with you, side by side with your UK numbers.