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\u2014especially low-income earners\u2014more than the companies themselves, analysts said.<\/p>\n
The \u2018de minimis\u2019 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.<\/p>\n
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\u2014including $79.3 billion from Hong Kong\u2014accounting for more than two-thirds of total US de minimis imports, according to a report released last week by the Congressional Research Service.<\/p>\n
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\u2014already more than 20% in some sectors and set to increase by another 10% following Trump’s latest order.<\/p>\n
US households will be negatively affected<\/b><\/p>\n
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.<\/p>\n
\u201cI don\u2019t think the US restrictions will kill cross-border e-commerce, but it will be more troublesome,\u201d Victor Gao, vice president of Beijing-based think tank, the Centre for China and Globalisation, told the South China Morning Post<\/i>. \u201cThe cost will be borne by consumers, and that\u2019s the sad part of the story,\u201d he added.<\/p>\n
\u201cRemoving this exemption will have a real impact,\u201d said Jayant Menon, a senior researcher at the ISEAS-Yusof Ishak Institute in Singapore. \u201cI 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,\u201d he said.<\/p>\n
However, Menon added that the biggest victims of this policy will be US households who benefit from cheap Chinese goods. \u201cAll this will do is reduce consumer welfare in the US by depriving some people of income,\u201d he said.<\/p>\n
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\u2019s second-largest export category.<\/p>\n
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.<\/p>\n
\u201cThis 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,\u201d he said.<\/p>\n
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.<\/p>\n","protected":false},"excerpt":{"rendered":"
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\u2014especially low-income earners\u2014more than the companies themselves, analysts said. The \u2018de minimis\u2019 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 […]<\/p>\n","protected":false},"author":1,"featured_media":7637,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[4],"tags":[6032,6025,6022,6026,6027,6019,6018,6029,1830,6031,6023,6020,6028,6021,3807,4506,6024,6030,5958,5906],"class_list":["post-7636","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia","tag-affordable-goods","tag-amazon-vs-shein","tag-china-us-relations","tag-chinese-imports","tag-consumer-welfare","tag-cross-border-e-commerce","tag-de-minimis-exemption","tag-e-commerce-growth","tag-global-trade","tag-import-duties","tag-low-income-consumers","tag-shein","tag-tariff-impact","tag-temu","tag-trade-policy","tag-trump-tariffs","tag-us-customs-duties","tag-us-china-tariffs","tag-us-china-trade-war","tag-wto-rules"],"yoast_head":"\n