US President Donald Trump’s elimination of a long-standing tariff exemption that benefited China’s cross-border e-commerce giants will hurt American consumers – especially those on low incomes – more than the companies themselves, analysts said.
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The “de minimis” exemption that allowed packages worth less than US$800 to enter the United States duty-free was removed as part of an executive order signed by Trump on February 1 raising tariffs on Chinese goods by 10 per cent.
The tax loophole played a big role in driving the growth of China’s cross-border e-commerce industry, as vendors sending small shipments directly to US consumers were able to avoid US import duties and customs checks.
Over the past decade, the number of shipments entering the US under the de minimis exemption has surged by more than 600 per cent, rising from about 139 million in the 2015 financial year to over 1 billion in the 2023 financial year, according to US Customs and Border Protection.
Between 2018 and 2021, the US received an estimated US$228.3 billion of de minimis shipments from China, including US$79.3 billion from Hong Kong, which made up more than two-thirds of the US’ total de minimis imports, the Congressional Research Service said in a report published last week.
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Removing the exemption means that goods from Shein, Temu and other Chinese cross-border e-commerce players will now be subject to US duties on Chinese imports – which already stood at more than 20 per cent in some industries and are set to rise by another 10 per cent following Trump’s latest executive order.