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Analysts: Tariff changes won’t cripple China’s e-commerce but will harm US consumers

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US President Donald Trump’s removal of a long-term tariff exemption that benefits China’s cross-border e-commerce giants will hurt American consumers—especially low-income earners—more than the companies themselves, analysts said.

The ‘de minimis’ exemption, which allowed packages worth less than $800 to enter the US duty-free, was removed as part of Trump’s 1 February executive order raising tariffs on Chinese goods by 10%. The tax loophole played a major role in the growth of China’s cross-border e-commerce sector, as sellers sending small shipments directly to US consumers could avoid US import duties and customs controls.

According to US Customs and Border Protection, the number of shipments entering the US under the de minimis exemption has increased by more than 600 percent over the past decade, from about 139 million in fiscal 2015 to more than 1 billion in fiscal 2023. Between 2018 and 2021, the United States received an estimated $228.3 billion in de minimis shipments from China—including $79.3 billion from Hong Kong—accounting for more than two-thirds of total US de minimis imports, according to a report released last week by the Congressional Research Service.

The removal of the exemption means that goods from Shein, Temu, and other Chinese cross-border e-commerce players will now be subject to US tariffs on Chinese imports—already more than 20% in some sectors and set to increase by another 10% following Trump’s latest order.

US households will be negatively affected

But analysts said China’s e-commerce players are ready to weather the change as they can mitigate its effects by adjusting their business operations.

“I don’t think the US restrictions will kill cross-border e-commerce, but it will be more troublesome,” Victor Gao, vice president of Beijing-based think tank, the Centre for China and Globalisation, told the South China Morning Post. “The cost will be borne by consumers, and that’s the sad part of the story,” he added.

“Removing this exemption will have a real impact,” said Jayant Menon, a senior researcher at the ISEAS-Yusof Ishak Institute in Singapore. “I think this was being pushed by companies like Amazon, which faced significant competition from Chinese e-commerce firms like Temu and Shein. In a sense, it levels the playing field,” he said.

However, Menon added that the biggest victims of this policy will be US households who benefit from cheap Chinese goods. “All this will do is reduce consumer welfare in the US by depriving some people of income,” he said.

Platforms such as Temu and Shein have become extremely popular in the US in recent years, offering a range of budget-friendly products from $8 carpets to $28 winter jackets. Last year, China’s cross-border e-commerce exports reached $93.58 billion, up 42% from a year earlier, according to Chinese customs data. Cross-border e-commerce shipments are now the country’s second-largest export category.

Liang Yan, an economist at Willamette University in Oregon, said the removal of the de minimis provision will hit low-income households the hardest because they rely on low-cost products from China.

“This has created a lot of service jobs such as e-commerce, warehousing, and delivery. US businesses and consumers will also be negatively affected by the removal of this provision,” he said.

Meanwhile, some analysts pointed out that the move could run afoul of World Trade Organization rules, as small packages are often used to avoid customs duties around the world. Collecting customs duties on millions of small shipments would also be costly for customs authorities, they added.

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Iran-Israel war: Why US discusses regional conflict with Pakistan

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US President Donald Trump and Pakistan’s Army Chief General Asim Munir held a special and important meeting during a time when tensions are rising in the Asian region. The meeting was held on Trump’s invitation and was not open to the media. However, both sides have released official statements afterward, which states that the main topics were discussed

The meeting focused on the ongoing conflict between Iran and Israel, Pakistan–India relations, especially the Kashmir issue, the situation in Afghanistan and future US–Pakistan cooperation.

Pakistan has recently improved its strategic position in the region. It has shown strong ties with China and is the only South Asian country openly supporting Iran in its conflict with Israel. Meanwhile, Pakistan remains an important player in Afghanistan.

Why the Pakistani Army Chief was invited to the US?

Although Pakistan has an elected civilian government, important decisions—especially related to foreign affairs and security—are often handled by the military. That’s why General Asim Munir was invited to meet Trump instead of the Prime Minister, General Munir’s influence has grown recently. After tensions with India, he was given the title of Field Marshal. His meeting with Trump is seen as a sign of his importance in both Pakistani and international politics.

According to the Pakistan Army’s media wing (ISPR): General Munir thanked President Trump for helping to ease recent tensions between Pakistan and India. Trump praised Pakistan’s role in fighting terrorism. Both agreed to work together in the future, especially in: Trade, Technology Minerals and energy Artificial intelligence Crypto currency and regional peace efforts as well.

President Trump also appreciated General Munir’s leadership during difficult times. Munir invited Trump to visit Pakistan, and Trump reportedly accepted the offer in principle.

Why US former peace envoy to Afghanistan, Khalilzad is not trusting Pakistan’s army chief

Former U.S. diplomat Zalmay Khalilzad criticized the meeting. He said General Munir cannot be trusted and reminded the U.S. that Pakistan has supported groups that harmed American soldiers in the past. According to Khalilzad, General Munir may be trying to get U.S. support for his interests in Afghanistan, which he believes could be risky for America.

Though no official list of US demands was made public, reports suggest a meeting was held in Saudi Arabia earlier, where American officials spoke with top Pakistani leaders. During that meeting, the U.S. reportedly made four key requests:  Pakistan should help the U.S. in counterterrorism operations when needed. Pakistan should slowly reduce its relations with China. Pakistan should recognize Israel after Saudi Arabia does. If the U.S. attacks Iran, Pakistan should support the U.S. instead of staying neutral.

These demands are similar to earlier U.S.–Pakistan arrangements during the Cold War and the War on Terror.

What could be expected in the future?

This meeting could mark the beginning of a new phase in US–Pakistan relations. In the past, Pakistan helped the U.S. during the Soviet-Afghan War and after 9/11. Now, with tensions involving Iran, India, and Afghanistan—and China expanding its role—the U.S. may again be looking to Pakistan as a key partner in the region.

Time will tell whether this leads to a long-term partnership or just another temporary agreement based on short-term goals.

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China pledges aid and signs friendship treaty at Central Asia summit

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China concluded its latest engagement efforts in Central Asia on Tuesday by pledging 1.5 billion yuan (US$209 million) for livelihood and development projects in the region.

The six nations participating in the second China-Central Asia Summit also signed a historic permanent friendship treaty.

“China is ready to provide 1.5 billion yuan in grant assistance to Central Asian countries this year to support livelihood and development projects of common interest to each country,” Chinese President Xi Jinping stated in his opening address at the summit in Astana, the capital of Kazakhstan.

“Additionally, China will offer 3,000 training opportunities to Central Asian countries over the next two years.”

Xi described the signing of the Permanent Good-Neighborliness and Friendly Cooperation Agreement as a milestone in relations between the six countries, calling it “an innovative initiative in China’s neighborhood diplomacy and a contribution that will benefit future generations.”

China has signed similar agreements with Russia and Pakistan.

Xi also emphasized the need for cooperation in a world that has entered “a new period of turbulence and transformation.”

State news agency Xinhua quoted Xi as saying, “There will be no winner in a tariff and trade war. Protectionists and hegemonists will harm both others and themselves.”

“The world should not be divided, but united; humanity should not revert to the law of the jungle, but work to build a common future for mankind,” he added.

Xi also announced the establishment of three cooperation centers focusing on poverty reduction, educational exchange, and desertification control, as well as a trade facilitation platform under the China-Central Asia cooperation framework.

In a statement on Wednesday, the Chinese Foreign Ministry said that China and the Central Asian countries are eager to improve road and rail connectivity and plan to open more direct flights to and from China to increase mutual exchange.

China will consider simplifying visa procedures with the five Central Asian countries, while all parties will study the feasibility of opening consulates.

Together with Kazakhstan, Kyrgyzstan, and Tajikistan, China will accelerate the modernization of existing port facilities and assess the need for new ones.

The summit was the second of its kind, following the inaugural one held two years ago in Xian, China.

These efforts reflect a deepening of China’s relations with Central Asia, which have historically focused on areas such as transportation infrastructure.

The region is a key part of the Belt and Road Initiative, Beijing’s global development strategy, and China has invested heavily in energy pipelines, infrastructure, and mining projects in Central Asia.

However, China also wants to expand cooperation into sustainable development and renewable energy.

These investments were a major focus of Xi’s meetings with the leaders of the five Central Asian states.

During the meetings, Xi stressed the need to uphold multilateralism and the global trade order. This is part of Beijing’s effort to position itself as a more reliable partner following the US tariff war.

Meeting with Turkmen President Serdar Berdimuhamedov, Xi called for expanding gas cooperation and exploring opportunities in non-resource sectors.

Security was also on the agenda.

“The two countries should further strengthen law enforcement, security, and defense cooperation, jointly combat the ‘three forces,’ and enhance cooperation in cybersecurity,” Xi said, referring to “terrorism, separatism, and extremism.”

Beijing views these forces as threats to national and regional security, and Xi has repeatedly emphasized this stance in his meetings with Central Asian leaders.

While China’s presence in Central Asia has historically focused on economic investments, its influence in the security sphere is growing through joint counter-terrorism drills, training programs, and aid.

This is particularly true in Tajikistan, which shares a long border with Afghanistan, where China is concerned about terrorists returning to carry out operations in its western Xinjiang region.

In his meeting with Tajik President Emomali Rahmon, Xi called for deeper cooperation in law enforcement and security to combat the three forces.

He also called for increasing bilateral trade and investment and improving transportation infrastructure.

Rahmon said Dushanbe would expand cooperation in new areas such as new energy, green industries, and artificial intelligence, and would “strengthen coordination with Beijing for the Shanghai Cooperation Organisation (SCO) to play a greater role.”

The SCO is the main forum for relations between China and the landlocked region. This political, economic, and security bloc was founded in 2001 by China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. Turkmenistan, reflecting its commitment to “permanent neutrality,” is the only Central Asian country outside the organization.

On Tuesday, Xi also held talks with Kyrgyz President Sadyr Japarov, describing relations between the two countries as being in “the best period in history.”

Xi said the construction of the China-Kyrgyzstan-Uzbekistan railway is a top priority, but new growth drivers such as clean energy, green mining, and artificial intelligence should also be developed.

The talks followed the signing of cooperation documents between China and the summit’s host country, Kazakhstan, covering trade, investment, technology, tourism, and customs.

Xi asked his Kazakh counterpart, Kassym-Jomart Tokayev, to accelerate cross-border railway projects and the improvement of port infrastructure.

Xi also stated, “Beijing and Astana should be strong supporters of each other in turbulent times.”

According to the Kazakh presidential office, Tokayev described relations between the two countries as stable and “not negatively affected by geopolitical challenges and turmoil or the international situation.”

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Iran’s uranium enrichment program since 1979

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Iran’s uranium enrichment program underwent major changes after the Islamic Revolution in 1979. During the Pahlavi dynasty, Iran had extensive cooperation with Western countries and even received offers to participate in enrichment consortiums.

But after the revolution, this cooperation stopped and Iran pursued the independent development of its own nuclear technology. In the 1980s, Iran was able to achieve an enrichment level of 3.67 percent, which was suitable for supplying fuel to nuclear power plants.

Over time, this rate increased, reaching 60 percent at some points, which raised concerns internationally. Accordingly, the JCPOA, a nuclear agreement between Iran and world powers, was signed in 2015. The agreement was concluded by Iran and the P5+1 group (the United States, UK, France, Russia, China, and Germany) and aimed to limit Iran’s nuclear program in exchange for the lifting of economic sanctions.

Under the deal, Iran committed to limiting its enrichment level to 3.67 percent and reducing its stockpile of enriched uranium. Extensive monitoring by the International Atomic Energy Agency was also imposed on Iran’s nuclear facilities.

US withdrawal from the JCPOA caused Iran to gradually reduce its commitments and increase its enrichment level.

But in 2018, the US administration under Donald Trump withdrew from the JCPOA agreement. The reasons for this withdrawal included US concerns about Iran’s regional influence and the lack of coverage of Iran’s missile program in the agreement.

The US withdrawal from the JCPOA caused Iran to gradually reduce its commitments and increase its enrichment level. In the following years, Iran announced that it had achieved 60pc enrichment and even had plans to increase this level further.

Because uranium enrichment has many applications – at low levels (3.67 percent), it is used to produce fuel for nuclear power plants. At higher levels (20 percent), it has medical applications, including the production of radioactive isotopes for cancer treatment.

But enrichment at 90 percent would lead to the production of nuclear weapons, although Iran has always insisted that its nuclear program is peaceful.

Deadly conflict between Iran and Israel, the two arch-enemy  and its impact on the region

The conflict between Iran and Israel is also directly related to Iran’s nuclear program. Israel has always considered Iran’s nuclear program a threat to its security and has in some cases launched cyberattacks and even physical attacks on Iranian nuclear facilities.

On the other hand, Iran considers Israel a threat to the region and supports resistance groups in the region. These tensions have made the Iranian nuclear issue one of the main axes of regional disputes.

Meanwhile, the war between Iran and Israel has widespread effects on the region and especially on the economies of neighboring countries, including Afghanistan.

This conflict not only has military and political consequences, but has also affected the economy of the region and increased economic instability.

Israeli attacks on Iran’s nuclear and military facilities, especially oil facilities, could reduce Iran’s oil production and exports.

This will lead to an increase in global oil prices, which will have a direct impact on the economies of countries that depend on energy imports. Countries in the region, including Turkey, Iraq, and Afghanistan, which source some of their energy from Iran, will face increased import costs.

However, Afghanistan will be directly affected by the war due to its heavy dependence on imports from Iran. The country imports many consumer goods, including food, fuel, and construction materials, from Iran.

The energy crisis is also a major consequence of the conflict between Iran and Israel

If the war intensifies, these imports will be disrupted and prices will increase. The energy crisis is also a major consequence of the conflict. Afghanistan gets a significant portion of its electricity from Iran, and if Iran’s energy exports decrease, Afghanistan will face a power shortage, which will have a negative impact on industries and the daily lives of people. Disruption of trade routes is another consequence of this war.

Reduced imports from Iran and increased transportation costs will increase inflation in Afghanistan, which will put more economic pressure on the people.

These effects occur through several economic and geopolitical mechanisms. New sanctions against Iran could reduce the country’s exports and increase the price of imported goods to Afghanistan.

Regional instability could also increase insecurity on the Iranian-Afghan border, which would affect trade and investment.

Military conflicts could make trade routes unsafe and increase the cost of transporting goods. A prolonged Iran-Israel war would be not only a military crisis, but also an economic crisis for the region and Afghanistan.

Rising oil prices, disruptions in trade, an energy crisis, and inflation are among the consequences of this war. Afghanistan, due to its heavy dependence on imports from Iran, will be the most affected and may face serious economic and social problems. The future of this crisis depends on diplomatic decisions and regional developments; but what is certain is that its economic effects will be widespread and long-lasting.

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