Attention Buyers and Sellers: The End of Duty-Free Cheap Parcels from China – What You Need to Know!

NEW YORK (AP) — Starting Friday, shoppers in the U.S. will face higher prices and delivery delays. This change comes as the Trump administration ends a duty-free exemption on low-value imports from China. This “de minimis rule” has allowed millions of low-value parcels to enter the country each day, mostly from China.

Companies that have relied on sourcing from China must now adapt to keep costs down. Interestingly, some American businesses may find a silver lining in this change. U.S. manufacturers could benefit from reduced competition from inexpensive Chinese imports, leading to better sales for them.

The new rule targets goods from mainland China and Hong Kong. It arrives alongside President Trump’s new 145% tariffs on China, sparking an ongoing trade war between the two economic giants. As a result, many sellers are noticing that consumers are starting to shop more cautiously.

This de minimis provision was introduced in 1938 to ease the flow of small packages, initially valuing imports at no more than $5—equivalent to about $109 today. The threshold increased to $800 in 2016, enabling a massive rise in low-value imports from China. In fact, these exports soared to $66 billion in 2023, compared to just $5.3 billion in 2018, according to a recent report by the Congressional Research Service.

Former President Joe Biden previously suggested that foreign businesses should not escape tariffs by claiming their goods are worth $800 or less. Efforts to end the de minimis exemption faced challenges early in the year due to concerns that the U.S. couldn’t handle the incoming volume of parcels.

Effects on Shoppers

With the new customs requirements, consumers can expect increased prices and potential delays. Sellers might incorporate tariff costs into their pricing or list them separately, similar to sales taxes. For instance, Temu, a Chinese e-commerce platform, has started listing “import charges” that have reportedly doubled some prices. Meanwhile, Shein has adopted a model stating: “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”

Currently, Amazon is not planning to show these new tariff costs alongside product prices, despite speculation about changes coming. This has led to mixed reactions from shoppers on social media platforms, with some expressing frustration over rising costs while others seek alternatives.

Impacts on Businesses and Carriers

Businesses that benefitted from the de minimis exemption now face challenges. John Curry, CEO of HAPARI International, an Arizona swimwear company, mentioned his shift to de minimis shipping for faster delivery and improved cash flow. Now, he plans to handle each parcel’s 145% duty as he awaits better solutions for U.S.-China trade relations.

Izzy Rosenzweig, founder of logistics company Portless, believes that while companies with solid profit margins may continue sourcing from China, many with tight margins might consider local options to minimize tariff costs. In January and February, over 70% of incoming packages were from China, indicating a significant reliance on these shipments.

Major carriers, like UPS and FedEx, have said they are ready to handle the new duties efficiently. The U.S. Postal Service has its own tariff option for low-value packages, which is set to rise to $200 by June 1. But experts warn that managing this escalation in workload could present serious challenges.

Who Stands to Gain?

Some U.S. industries, like flag manufacturers, anticipate benefits from the termination of the duty exemption. The Flag Manufacturers Association of America noted that they suffered a 25% to 35% drop in sales last year due to cheap imports being passed off as U.S.-made. Larry Severini, CEO of Embroidery Solutions, emphasized that duties are needed to ensure fair competition.

Heather Mason from the National Bike Dealers’ Association pointed out that consumers often opt for cheaper alternatives that don’t meet safety or quality standards, leading to risks and disadvantages for reputable brands. She believes ending the de minimis rule will level the competitive landscape for these businesses.

As this situation unfolds, both shoppers and businesses will need to navigate the changing landscape of imports and tariffs, which could alter consumer buying habits and local market dynamics.

Source link

China, International trade, Transportation and shipping, Inflation, General news, Tariffs and global trade, United Parcel Service, Inc., FedEx Corp., Donald Trump, Joe Biden, U.S. news, Business, United States government, Heather Mason, Amazon.com, Inc., U.S. Customs and Border Protection, Larry Severini, Politics, U.S. News