End of an Era for Cheap Chinese E-Commerce
Many Americans might not have felt a major impact of President Donald Trump’s comprehensive tariffs – until now. This is because a large shipping exemption expired on Friday at midnight. The exemption, as it is known, made it possible to send goods worth less than $800 into the US without incurring tariffs, often skipping time-consuming inspections and paperwork.
Impact on American Consumers
The exemption helped to enable the way countless Americans shop, and enabled ultra-low-cost Chinese e-commerce sites such as Shein, Temu, and Aliexpress to deliver everything from yarn to terrace furniture, clothing to photography equipment, and more to US households. The upcoming end has delivered alarm bells on social media, with a basic tariff of up to 145% potentially doubling the costs for all these cheap products that are popular with Americans.
Preparing for the Changes
Large airlines such as UPS, FEDEX, DHL, and the United States Post Service say they are prepared for the changes. The government also says it is prepared; a spokesman for the US customs and border protection stated that "we are prepared and equipped to carry out extended package demonstrations and enforce orders effectively". Whether regular American buyers are ready for the changes is another matter.
From Tchotchkes and Trade Policy
When President Donald Trump closed the exemption for goods from Hong Kong and China at the beginning of this year, chaos occurred. USPS briefly stopped delivering plots from China, and delivery times for plots that were delivered became longer with limited information on the processing of packages in the US. At the center of the problem: the sheer volume of packages. More than 80% of the total US e-commerce imports in 2022 were for minimal imports, which mostly come from China.
The End of an Exemption
CBP announced that it currently processes "almost 4 million Duty-Free de minimis programs a day". Studies show that a large part of these programs come from China and Hong Kong. In total, CBP stated that in the last financial year, 1.36 billion packages came to the United States under the exemption of minimis. These are many dog bandanas, pearl kits, spatula, and tchotchkes. Regular buyers of Temu and Shein said that they increasingly turned to the website because they couldn’t find products at affordable prices in the US.
The Impact on Low-Income Households
Households with low incomes will suffer the most at the end of the cheap Chinese e-commerce websites. About 48% of the DE-Minimis research from Ucla and Yale economists. The changes could come in phases. For example, Shein and Temu have already increased prices before the end of the DE minimis exemption, and followed the hiking prices persecuted by CNN for several goods.
Increased Costs for Retailers
Supers will also see higher costs. DHL told CNN that the company had "increased our level of recruitment to support the additional volume of the informal entry-levels we expected". Goods from China and Hong Kong, which are sent via UPS, DHL, and Fedex, are subject to a tariff of 145% and additional product-specific tariffs. Goods that are delivered via USPS are subject to a tariff of 120% or a fee of $100 per post. On June 1st, the flat fee increases to $200.
Public Opinion
A 59% majority of the public says that Trump’s politics of the economic conditions in the US have worsened, according to a CNN survey carried out by SSRS last month. The survey was carried out from April 17th to 24th after the White House had announced expansive new tariffs in dozens of countries for the first time and then called a break for many of them. Nevertheless, 6 out of 10 respondents said that Trump’s politics had increased the cost of living in their community. On Friday, many Americans, since the liberation from the de Minimis ended, were even higher.
A Big Deal
"It’s a very big deal," said Trump on Thursday at a cabinet meeting and called the de-minimis exception "a big scam". He added: "And we are over, we put it an end."
