US ends duty-free shipping loophole for low-cost goods from China
Source: AFP
The United States on Friday ended a tariff exemption for goods shipped from China worth less than $800, dealing a major blow to popular e-commerce sites such as Shein and Temu, whose cheap items consumers have come to rely on.
The decision was announced last month, with the White House calling it a "critical step in countering the ongoing health emergency posed by the illicit flow of synthetic opioids" from China to the United States.
Starting on Friday, goods shipped commercially will now be subject to new tariffs of 145 percent -- the current level of levies imposed on goods coming from China.
Items sent through the US Postal Service will be hit with duties of 120 percent of their value, or a $100, which will increase to $200 next month.
The elimination of the 'de minimis' exemption now subjects even low-value imports to tariffs," EY chief economist Gregory Daco wrote in a recent note to clients, adding it would squeeze "already-thin margins and driving up end prices."
The measures mark the latest salvo in a burgeoning trade war between the United States and China -- the world's two largest economies.
The White House has also slapped additional levies of 25 percent on several sectors including automobiles, steel and aluminum from China.
Beijing retaliated with sweeping 125 percent levies on US imports.
Most other US trading partners face a baseline tariff of 10 percent, except for Mexico and Canada which face a higher 25 percent tariff on goods not covered by a current North America free-trade deal.
The move threatens to hammer the business model of several large firms that ship cheap goods from China -- including fast-fashion titans Shein and Temu.
However, Chinese e-commerce sites listed on the New York Stock Exchange were largely in the green on Friday, most likely reflecting optimism about trade negotiations between Beijing and Washington, and the fact that many of these changes were already priced into the financial markets.
At around 14:40 GMT, PDD, owner of Temu, was up 3.7 percent, while Alibaba was up around 4.0 percent.
The Financial Times reported earlier this week that Shein was postponing a long-standing plan to list on public stock markets in London due to the looming de minimis changes.
Trump first floated cancelling the exemption in February before backtracking after the move caused logistical disruptions.
At the time, Beijing accused the United States of "politicizing trade and economic issues and using them as tools."
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Source: AFP
