Trump ends tax exemption for low-value Chinese imports!
A heads-up for shoppers wowed by low-priced products on Chinese shopping apps: the days of getting trendy fashion clothing, gadgets and gifts that cost less than lunch delivered to your door in 10 days are probably numbered.
President Donald Trump is ending a little-known but widely used exemption that has allowed up to 4 million low-value packages, most of them originating from China, to arrive in the U.S. every day duty-free.
An executive order the president signed on Wednesday will eliminate the "de minimis provision" for goods from China and Hong Kong on May 2. The tax exemption, which applies to packages worth $800 (€725.3) or less, has helped Chinese-founded e-commerce companies like Shein and Temu thrive as they enter the U.S. retail market.
American politicians, law enforcement agencies and business groups have long described the policy as a trade loophole that gave cheap Chinese goods an advantage and served as a portal for illegal drugs and counterfeits to enter the country.
The sweeping tariffs that Trump announced on Wednesday also aim to end the duty-free exemption for all imported goods worth less than $800, but only when the U.S. government has the personnel in place to process parcels from every country.
What will be the effect on prices and shipping times?
A White House fact sheet said that small packages of Chinese products sent through the international postal network will be subject to a customs tariff of either 30% of their value or $25 (€22.6) per item, an amount that will increase to $50 (€45.3) per item after June 1.
Commercial carriers such as FedEx and UPS will be required to report shipment details and transfer appropriate duties to U.S. Customs and Border Protection, according to the White House. After Trump's latest round of tariffs, the tariff rate on Chinese products will be at least 54%.
Supporters of the de minimis exemption have argued that eliminating it would increase costs and hurt low-income consumers and small businesses. The cost of the tariffs threatens to deal a blow to the U.S. operations of companies like Shein and Temu, which expanded rapidly in the country by using the de minimis provision to offer ultra-cheap fast-fashion items from China.
However, it is unclear what impact the loss of the tax exemption will have on the two online retailers, as well as on US companies such as Amazon and Walmart, whose platforms include virtual marketplaces where international sellers offer products.
Shein and Temu have already built warehouses in the US so they can get orders to American buyers faster. Shein recently opened a fulfillment and logistics center in the Seattle area.
Ram Ben Tzion, chief executive of digital verification platform Publican, said he expected companies to "be forced to rethink their business strategy and perhaps explore pulling out of the US market."
In a statement emailed to the AP, FedEx said it would support its customers in adapting to the new regulatory requirements and said it would be important for carriers to have "properly completed paperwork prior to pickup" so that shipments move smoothly.
Hilton Beckham, an assistant commissioner of U.S. Customs and Border Protection, said the federal agency was ready to implement the latest tariffs. “Our automated systems have been fully updated to capture, assess and administer all of the new duties, and clear guidance will be provided to support uniform enforcement across the country,” Beckham said.
Ben Tzion, of Publican, said he would "highly doubt" the US government was ready to process the large number of low-value shipments that will be taxed starting next month. The Hong Kong government said Hong Kong Post would "temporarily maintain" postal services in the US until May 2, but "will not collect any so-called fees on behalf of the US authorities."
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