Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
US President Donald Trump has temporarily paused measures to close a tariff exemption on low-cost shipments from China while officials figure out how to tax the millions of packages that arrive in the US every day.
In an amendment to an executive order signed on Wednesday and published on Friday, the White House said the so-called de minimis provision — which exempts shipments under $800 in value from tariffs and rigorous customs checks — would remain in place until “adequate systems are in place to fully and expediently process and collect tariff revenue”.
The de minimis provision was designed to help households and small businesses purchase low-cost items from abroad without making them subject to onerous customs checks. In recent years, it has proved a boon to ecommerce platforms that ship directly to consumers, such as China’s Shein and Temu.
Trump last week cancelled the exemption in an executive order announcing an additional 10 per cent tariff on goods from China, which the White House said was aimed at punishing Beijing for allowing the flow of deadly opioid fentanyl into the US.
But had analysts warned that the decision, which came into effect just days later, would force customs officials to apply the more complicated formal entry process to every package arriving from China.
It would also make parcels formerly qualifying for de minimis subject not only to the additional 10 per cent tariff but also to existing trade levies, according to experts.
The US Postal Service on Tuesday suspended receipt of packages from China, including Hong Kong, when the tariffs came into effect, before backtracking one day later to accept shipments.
USPS said it was working with customs officials to establish an “efficient collection mechanism”, as the rapid implementation of the directive increased workloads for customs officials and stoked turmoil for exporters and freight carriers.
US officials have long had the de minimis rules in their sights. Domestic retailers that purchase items from overseas in bulk have complained that the exemption gave Chinese ecommerce groups an unfair cost advantage.
Former US president Joe Biden’s administration had proposed measures to tighten rules concerning the de minimis regime.
The US Customs and Border Protection estimates that it processes more than 4mn low-value shipments daily. A congressional select committee report in 2023 estimated that about 30 per cent of those packages came from Temu and Shein.
The move to repeal the de minimis exemption hit Chinese ecommerce sellers this week, who said some logistics groups were charging withholding fees to cover the levies and other customs costs.
A report from analysts at Nomura, the Japanese investment bank, estimated that China shipped $46bn worth of packages to the US under de minimis rules in 2024, and that scrapping the exemptions could knock 0.2 percentage points off Chinese economic growth in 2025.
Trump is expected to hold a call with Chinese leader Xi Jinping in the coming days to avoid an escalation in trade tensions, with Chinese retaliatory tariffs on the US set to take effect on Monday. But the US president said on Tuesday that he was in “no rush” to talk to his Chinese counterpart.
Credit: Source link
