President Donald Trump has announced a pause on imposing tariffs on small-value packages coming from China, providing federal agencies time to establish systems to process and collect tariff revenue on the millions of shipments entering the U.S. each day without paying taxes.
The executive order, issued on Wednesday, does not specify when the pause will end. It will cease once the U.S. Department of Commerce sets up “adequate systems” to efficiently handle the collection of tariffs on these goods. The pause follows the recent implementation of a 10% tariff increase on Chinese goods, which also applies to small packages sent through duty-free channels.
John Lash, group vice president at the supply chain platform e2open, highlighted the logistical challenges the pause presents, noting that the volume of small packages is “incredible,” and now many shipments will require full tariff filings. This marks a significant shift for a system that previously allowed low-cost items to be exempt from tariffs.
Ending the tariff exemptions for these small packages has gained bipartisan support in Washington. Many lawmakers argue that the policy has allowed tariff evasion and facilitated the flow of unsafe products, such as counterfeits and illicit drugs, into the U.S. However, it has also helped maintain affordable prices for U.S. consumers and small businesses.
In 2023, Chinese exports of low-value packages to the U.S. soared to $66 billion, with more than 1 billion packages arriving at U.S. customs for the first time. This number is up significantly from 134 million packages in 2015. The U.S. Postal Service had initially announced it would stop accepting parcels from China and Hong Kong, but reversed this decision, opting to work with Customs and Border Protection to implement the new tariff collection system.
Analysts warn that the policy shift could lead to increased prices and delivery delays as U.S. customs officials face an overwhelming volume of packages that now need to be scrutinized. Some e-commerce platforms, such as Temu, have already begun adjusting to the changes by increasing their warehousing capabilities in the U.S. and shipping products in bulk containers.
The policy change challenges the de minimis exception rule, which was originally designed in 1938 to facilitate the flow of small packages under $5. This threshold has been gradually raised over the years, but the rapid rise of cross-border e-commerce, particularly driven by Chinese exporters, has strained the system.
The U.S. market has become a significant destination for Chinese low-value packages, and the adjustment to the tariff policy will undoubtedly reshape the cross-border e-commerce landscape, increasing operational costs for overseas sellers and potentially shifting to bulk shipping to mitigate these changes.
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