The U.S. Abolades China’s Small Claims Duty-Free, Hit by Temu, Shein

U.S. President Donald Trump announced mutual tariffs around the world on the 2nd, saying he would also eliminate tax-free benefits for small packages from China.

Chinese e-commerce companies Temu and Shein, which have been targeting the U.S. market with ultra-low-priced products produced at Chinese factories, are expected to be directly hit.

According to Reuters and AFP on the 3rd, President Trump signed an executive order to abolish the “small duty-free system” that exempts tariffs on imports under $800 from China.

This executive order will take effect at 00:01 a.m. Eastern Time on the 2nd of next month.

Tariffs equivalent to 25% each or 30% of the value of the product will be imposed on all goods entering the United States under $800 from China and Hong Kong.

Earlier on February 4, the U.S. blocked international parcels from China and Hong Kong, but reversed it a day after the logistics crisis occurred.

According to U.S. authorities, U.S. Customs processes more than 4 million duty-free parcels a day on average. As of 2024, the amount of duty-free parcels exceeded 1.4 billion, of which 60% were from China.

Shein and Temu have grown rapidly in the global market by supplying large quantities of ultra-low-priced products at a time when household consumption has decreased worldwide due to rising prices.

They export tens of billions of dollars worth of clothing, electronic devices, and other products to the United States every year through supply chains in China.

The abolition of tax-free benefits has increased the likelihood that these e-commerce companies will undergo customs checks more frequently and will bear the additional burden of complying with food safety and national security regulations, AFP noted.

In addition to the aim of eliminating trade loopholes used by Chinese e-commerce companies, the move is also interpreted as a willingness to block illegal distribution channels of Chinese drugs.

President Trump emphasizes China’s responsibility, saying that raw materials such as “zombie drugs” fentanyl are produced in China and supplied to the United States by Mexican drug cartels.

Chinese authorities deny this, but it has been found that drug smugglers are using the ‘small tax exemption system’ to bring in chemical materials, Reuters reported.

EJ SONG

US ASIA JOURNAL