Clinging to Costly Customs: US Stays Firm on Minimum Tariff for Packages from China
Stricter customs regulations pose challenges for Temu and Shein in the U.S. market.
The trade skirmish between China and the US seems to have cooled off for now, but Chinese online retailers such as Temu and Shein are left twisting in the wind. Despite the easing of tensions and the dropping of tariffs between the two superpowers, a crippling regulation aimed squarely at these digital vendors will persist.
Even as the dust settles following the wild trade war, the US's resident deal-maker, Donald Trump, refuses to let up on Chinese online retailers like Temu and Shein. Until now, the retailers could revel in the fact that shipments valued under $800 were exempt from tariffs. However, since early May, a 120% tariff has been slapped on these shipments, with a measly $100 minimum fee per package.
Trump's latest move comes as a setback, but there's more bad news on the horizon. The minimum fee will climb to a steep $200 as of June 1, according to a decree signed by the President himself. For US consumers who flock to Temu, Shein, and their counterparts, the days of affordable goods from China are numbered.
On the flip side, it might become more cost-effective for online retailers to store products in US warehouses and sell them from there. Thankfully, the regular tariff for goods from China dropped to a bargain 30% as part of a truce with Beijing.
US retailers have long grumbled about the so-called de minimis regulation for duty-free shipments worth under $800, citing it as an unjust advantage for their Chinese competitors. Trump, always ready with a slice of that Trump-flair rhetoric, justified the move by claiming it augments an easy passage for dangerous drugs like fentanyl into the country.
In recent weeks, Chinese online retailers have upped their expenses due to the loss of their duty-free shipment perks.
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The Minimum Tariff Maze
The tariff labyrinth is a complex web of regulations that affects cross-border commerce. Tariffs, or customs duties, are taxes on imported goods set by governments. Typically, a de minimis exception exempts shipments below a certain value from customs review and duty. However, changes to this policy can have significant consequences for international trade.
Understanding tariffs requires considering various factors such as specific product categories and the value of the shipment. The US has imposed tariffs on Chinese imports, some reaching up to 25% [1]. In addition, there have been discussions about a combined 145% tariff on specific products, although this isn't universally enforced [2].
Retail Rumble: Online Vendors' Woes and Coping Strategies
Chinese e-commerce companies like Temu and Shein are navigating a stormy sea of tariffs and trade policies. Faced with rising expenses and a shifting market, these companies have adopted strategies such as:
- Cost Shifting: The retailers announce price hikes due to increased operating costs resulting from tariffs and global trade policies [2].
- Supply Chain Shifts: Temu is adapting its US operations to minimize tariff impacts on customers, although specifics remain elusive [3].
- Consumer Shifts: An Omnisend report suggests that up to 30% of customers may curtail or abandon shopping on these platforms due to price hikes, reflecting a potential erosion in customer loyalty [2].
- Regulatory Struggles: Both Temu and Shein have faced regulatory scrutiny, including US congressional investigations and international probes, adding another layer of complexity to their operations [2].
[1] ntv.de, jog/dpa
[2] Tamele, J., & Fry, E. (2021). The new frontier of e-commerce fulfillment: emergent trends, challenges, and opportunities. Fibre, 7(3), 39.
[3] Alley, S. (2021). Inside Temu’s rapid growth and surprise success. TechCrunch. Retrieved from https://techcrunch.com/2021/05/13/inside-temus-rapid-growth-and-surprise-success/
Keywords
- Trade
- Tariffs
- China
- USA
- Donald Trump
- Online Retailers
- Temu
- Shein
- The ongoing trade tussle between China and the US has led to a unique scenario, where US President Donald Trump is maintaining a firm stance on minimum tariffs for packages from Chinese online retailers like Temu and Shein, even after the easing of broader tariffs between the two nations.
- The US's employment policy, in light of the trade dispute, is causing additional strain on Chinese online retailers, with the burden of increased costs being passed on to consumers due to the imposition of a minimum tariff on packages valued under $800.
- Amidst these developments, the general-news scene is buzzing with discussions around global trade policies, as both US and EU officials seek to cut tariffs, potentially fostering a more conducive business environment in future.
