An agreement between the US and China to temporarily slash tariffs stopped short of reinstating the US “de minimis” duty exemption for e-commerce packages from China, but still gives online retailers like Shein and Temu a window to adapt their businesses.
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The Chinese firms, which have taken market share from dollar stores and shopping-centre rivals to surge to among the top 10 downloaded apps in the US, would likely use the 90-day reprieve to bring in bulk shipments and restock their US warehouses, trade experts said.
US President Donald Trump’s administration on May 2 ended the de minimis policy allowing packages worth less than US$800 ordered online from mainland China and Hong Kong to enter the US duty-free.
Shipping products duty-free from Chinese factories to American consumers helped Temu and Shein surge in popularity, selling ultra-cheap gadgets, clothes and accessories to US shoppers. Their success drove Amazon.com to set up a copycat service, Amazon Haul, which also benefited from the de minimis policy.
The removal of de minimis exposed those packages to steep tariffs of up to 145 per cent on most Chinese goods, threatening business models centred around rock-bottom prices and leading Shein and Temu to cut advertising spending in the US and turn to Europe instead. Amazon Haul launched last week in the UK and Saudi Arabia.
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With the de minimis issue absent from Monday’s announcement, trade experts said the exemption did not seem to be coming back. Even so, the 90-day cut in tariffs to 30 per cent from 145 per cent would help Shein and Temu restock their US warehouses at lower cost.