Etsy CEO Advocates for Small Sellers Amid Trade Policy Concerns

Etsy CEO Josh Silverman is advocating against policy changes that he says will hurt the 8 million Etsy sellers on his platform, appealing to an administration that has pledged to protect the American worker.

In the Trump administration’s rush to protect American industries and assess duties on imports, especially from China, solo entrepreneurs like the ones on Etsy become “collateral damage,” Silverman said at the recent Semafor World Economy Summit in Washington, D.C.

“Unfortunately, in this environment, nuance is not our friend,” Silverman said. “Some of these broad-brush policies that are intended for others … might really hurt 8 million Etsy sellers.”

A central issue is the future of de minimis exemption, which allows items valued at $800 or less to enter the U.S. without being subject to customs duties or extensive inspection delays. Trump signed an executive order that will eliminate this exemption for shipments from China and Hong Kong beginning May 2.

Silverman said most Etsy sellers won’t be affected directly by the end of the de minimis exemption for China since they buy about 90% of their supplies within a 50-mile radius of their home.

However, it’s unclear where the raw materials for those supplies come from, and if those become more expensive, then Etsy sellers would have to pay more and perhaps pass along the increase to their buyers.

“If the result is inflation and American consumers feeling much poorer, that would be very bad for Etsy sellers,” Silverman said.

The CEO said there are also unanswered questions around who would be collecting the duty on small-value goods, identifying the contents of a package, being responsible for the money flow and the like.

Without an organized system, “you will literally see millions of parcels building up at the point of departure or the point of arrival, with no process in place to be able to understand where the money is, who owns what,” Silverman said. “It’s going to grind small commerce to a halt.”

Ideally, Etsy would welcome clear exemptions for goods from “trusted” trading partners such as Europe and Canada, Silverman added. Otherwise, Silverman envisions a “billion-package backlog” disaster.

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1099-K Headache

Beyond trade concerns, Silverman also wants to change tax laws that would affect independent entrepreneurs, such as the lowered threshold for 1099-K tax reporting requirements. States also have their own tax reporting rules that the entrepreneurs need to follow, which may differ from the federal laws.

It used to be that for federal taxes, one would have to file taxes after recording revenues of at least $20,000 and 200 or more transactions. The revenue threshold was lowered to $600 with no minimum for transactions.

For example, if a consumer purchased a musical instrument for $1,000 and resold it for $800 at a $200 loss, they would be required to file a 1099-K form to the IRS, according to Silverman.

“Processing a tax filing for someone that owes no taxes is a ton of friction for a tax filer, for no revenue for the IRS,” he argued.

Silverman is seeking to revert the threshold to the previous $20,000 or even $10,000, noting that this change is the subject of two current congressional bills. “We’re fine with either,” he said.

Another area of advocacy is federal support for caregivers. The CEO said there are congressional bills circulating that would do just that.

“What our sellers tell us is the number one thing holding them back from being more successful is time, and for most of them, that means their caregiving responsibility,” Silverman said.

Eighty-five percent of Etsy’s sellers are women and 25% of them have a child at home.

“They’re either caring for their young children or their aging parents. And if you are a business of one, there is no real caregiving support,” Silverman said. “Paid time off is not a thing when you’re a business of one. If you’re not there to make the product and ship the product, revenue is zero that day.”