On February 7, U.S. President Trump signed an executive order reinstating the policy of exempting small packages from China (valued at less than $800) from tariffs until a sufficient system is established to process tariff revenues. Trump had previously announced the removal of this exemption threshold, but reversed the decision in less than a week. This policy shift was highlighted by CNBC as an example of the frequent policy changes during Trump's second term, potentially causing uncertainty for American businesses.
According to a press release from the White House, Trump stated that the restoration of tax-free treatment is to address current bottlenecks in processing tariff revenues until a more adequate system is set up. This change is also seen as positive news for Chinese e-commerce platforms such as Temu and Shein, allowing them to continue benefiting from the small-amount tax exemption, thereby enhancing their competitiveness in the U.S. market.
In recent years, Chinese e-commerce platforms like Temu and Shein have experienced rapid growth by directly selling to U.S. consumers through the "de minimis" tax policy. In 2016, the U.S. Congress raised the exemption threshold for small packages from $200 to $800, facilitating a surge in the volume of small packages from China. By 2022, the number of these packages exceeded one billion, with Temu and Shein being the largest beneficiaries.
However, Trump had previously attempted to curtail the influence of low-value imports, particularly from Chinese e-commerce platforms, by adjusting the policy. On January 17, Trump proposed tightening the related tax exemption policy and signed an order on February 1 that revoked the exemption for imports valued below $800. The change in this executive order means that Chinese e-commerce platforms have temporarily regained the advantage of continuing to ship directly to the U.S.
While the policy fluctuations during the Trump administration have raised concerns among U.S. businesses and consumers, particularly with regard to potential impacts on logistics and transportation, the reinstatement of this policy undoubtedly represents a victory for Chinese e-commerce platforms and cost-conscious shoppers. Meanwhile, a prior notification by the U.S. Postal Service to suspend parcel deliveries from China was retracted after just one day.
This change has also caught the attention of experts, who point out that if every package has to be inspected, the U.S. international logistics system will face significant pressure, possibly leading to increased shipping costs and delays.
