From China, the US has ended the tariff exemption for low-value parcels, though challenges in implementation remain.

Taiwan • Business • 05/02 05:02
From China, the US has ended the tariff exemption for low-value parcels, though challenges in implementation remain.

On May 2, 2025, the United States terminated the tariff exemption for low-value import packages from China and Hong Kong, ending the "de minimis" system. This policy change occurred due to accusations by the Trump administration against China's trade practices and drug smuggling, affecting e-commerce platforms such as Shein and Temu. Even though the policy has taken effect, the U.S. Customs and Border Protection is facing challenges in implementation, including complex customs procedures and inadequate logistics handling capacity, revealing systemic bottlenecks.

Key Updates

05/02 19:32

Apple, Samsung, and Microsoft adjust supply chain and pricing strategies in response to U.S. tariffs and global inflation pressures.

Apple, Samsung, and Microsoft are adjusting their supply chains and pricing strategies in response to U.S. tariffs and global inflation pressures. Apple is moving the production of iPhones for the U.S. market to India, shifting the production of iPads and other products to Vietnam, and sourcing chips from TSMC's U.S. facilities. Samsung is considering increasing product prices in the U.S. market due to tariff impacts. Microsoft has already raised the global prices of Xbox consoles and accessories to account for rising development costs.

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The White House says tariffs will not increase car prices, while automakers such as GM and Ford have expressed concerns.

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05/02 15:30

American Companies Face Tariff Strain: Apple's Costs Skyrocket, McDonald's Sales Decline, The Business Community Urges Policy Changes

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05/02 09:03

U.S. Tariff Policies Impact SHEIN and Temu Severely: Rising Prices, Supply Chain Restructuring, and Drop in App Rankings

Starting May 2, 2025, the United States will remove the tax exemption for small parcels valued under $800 from China and impose an import tax of up to 120% or a fixed tax of $100 per package, having a significant impact on Chinese cross-border e-commerce platforms SHEIN and Temu. The prices of goods on both platforms have risen by 40% to 100%, leading Temu to shift to a local warehouse model and nearly eliminate direct shipments from China. A reduction in advertising has caused a drop in app store rankings. This policy change is forcing consumers to switch to local platforms, altering their shopping habits.

05/02 05:02

Yiwu businesses are turning to South American and Middle Eastern markets: The US-China trade war has severely damaged the US toy supply chain

Amid the US-China trade war and tariff pressures, exporters in Yiwu in Zhejiang, China, have shifted their focus away from the US towards South American and Middle Eastern markets, which has impacted the US toy supply chain. Exports from Yiwu to the US have significantly decreased, and merchants such as Hu Tianqiang and Lin Xiupeng have adjusted their strategies. The US toy industry faces supply disruptions and rising costs as companies like Hasbro and Spin Master seek to diversify their supply chains, though challenges persist.

05/02 05:02

From China, the US has ended the tariff exemption for low-value parcels, though challenges in implementation remain.

On May 2, 2025, the United States terminated the tariff exemption for low-value import packages from China and Hong Kong, ending the "de minimis" system. This policy change occurred due to accusations by the Trump administration against China's trade practices and drug smuggling, affecting e-commerce platforms such as Shein and Temu. Even though the policy has taken effect, the U.S. Customs and Border Protection is facing challenges in implementation, including complex customs procedures and inadequate logistics handling capacity, revealing systemic bottlenecks.

05/02 04:31

Trump Closes Tax Loophole for Chinese Goods: Online Shopping Costs Increase for American Consumers

Former President of the United States, Donald Trump, ended the de minimis tax exemption rule applicable to China and Hong Kong at the end of April 2025. The rule allowed low-cost goods to enter the U.S. market tax-free. This move was intended to protect American manufacturing and small businesses. However, it results in higher online shopping costs and delivery delays for consumers. Chinese e-commerce platforms like Shein and Temu are affected, resulting in higher product prices. The policy has drawn international attention, as the UK and the EU consider similar measures.

05/02 03:05

In 2025, the US-China trade war heated up: China called for the removal of unilateral tariffs in order to facilitate dialogue.

On May 2, 2025, China's Ministry of Commerce announced it is evaluating the United States' willingness to enter into dialogue, reiterating that the U.S. must remove unilateral punitive tariffs as a precondition for negotiations. The U.S. has imposed tariffs of 145% on Chinese goods, and China has retaliated with tariffs of 125%, resulting in a decline in U.S. exports to China, impacting 860,000 jobs, with the agricultural sector hit hardest. Trade tensions between the two countries are escalating, with growing calls for dialogue and tariff cuts.

05/01 18:32

April manufacturing data from the U.S. affects expectations for a rate cut, U.S. bond market falls.

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05/01 18:01

Microsoft is raising Xbox prices to $380 for the Series S and $600 for the Series X due to the trade war and increased development costs.

On May 1, 2025, Microsoft announced a price increase for the Xbox Series S and Series X consoles, accessories, and some games, effective immediately. The Series S has risen to $380, and the Series X has risen to $600. Prices for accessories like wireless controllers and headsets have also increased. Microsoft stated that the price adjustment is due to market conditions and rising development costs, affected by trade wars and supply chain pressures. This move makes Microsoft the latest company, after Sony and Nintendo, to adjust gaming hardware prices.

Policy Background and Changes

According to Section 321 of the Tariff Act of 1930, the United States has long allowed import parcels valued at no more than $800 to be exempt from duties and taxes. This system was originally intended to save administrative costs and avoid taxing "insignificant" goods. In 2016, Congress raised the duty-free threshold from $200 to $800, further promoting the development of cross-border e-commerce.

However, as Chinese e-commerce platforms extensively utilized this system to import low-cost goods and were accused of being a smuggling channel for fentanyl precursor chemicals, the Trump administration signed an executive order in February 2025, announcing the termination of de minimis treatment for China and Hong Kong. The order was initially set to be implemented in February but was delayed due to chaos caused by cargo backlogs at airports, eventually taking effect on May 2.

Under the new regulations, all parcels from China and Hong Kong, regardless of value, must undergo formal customs declaration and pay the corresponding tariffs. Goods shipped via courier companies (such as FedEx, UPS, DHL) will face tariffs as high as 145%, while parcels sent through the postal system will be subject to a 120% tax or a fixed fee of $100 per item (increasing to $200 starting in June).

Import and Export Data and Policy Impact Scope

According to U.S. Customs data, the U.S. processed over 1.3 billion de minimis parcels in 2024, equivalent to about 40 parcels per second, most of which came from China. In 2023, the total value of goods exported from China to the U.S. under this system reached $66 billion, a significant increase from $5.3 billion in 2018.

According to a congressional report, Chinese e-commerce platforms like Temu and Shein account for about 30% of U.S. de minimis imports. These platforms gain a price advantage by splitting goods into small parcels to avoid formal customs declarations and tariffs. The U.S. government believes this practice not only harms domestic businesses but also weakens the ability to regulate illegal goods.

Implementation Challenges and System Bottlenecks

Although CBP claims to be ready, there are still multiple challenges at the implementation level:

1. Overwhelming Volume

CBP currently needs to process about 4 million low-value parcels daily, with more than half coming from China. When de minimis treatment was briefly suspended in February 2025, JFK Airport in New York alone had a backlog of 1 million parcels within 48 hours, highlighting the system's fragility.

2. Complex Customs Procedures

The new regulations require all formally declared goods to provide a 10-digit HTS (Harmonized Tariff Schedule) classification code and undergo electronic data transmission and bond declaration. Many small and medium-sized enterprises and platform sellers lack customs experience, making it difficult to comply promptly.

3. Inconsistent Enforcement Standards

According to the latest CBP guidelines, some parcels from China and Hong Kong valued under $800 can still use the "informal entry" procedure without providing a complete HTS code and detailed content description. While this reduces customs pressure, it also weakens the accuracy of screening and taxation, increasing enforcement loopholes.

4. Ambiguous Responsibility

According to CBP regulations, courier companies are responsible for collecting tariffs and making regular payments, as well as maintaining international shipping bonds. However, the U.S. Postal Service (USPS) stated it would not participate in tax collection, leaving airlines and China Post to coordinate tax payments and proof, leading to unclear division of responsibilities and increased implementation difficulty.

Industry and Government Response

eBay has informed users that parcels from China and Hong Kong may incur an additional fee of $10 to $30 and promised to assist sellers and buyers in adapting to the new regulations. Companies like Amazon, UPS, and FedEx have expressed concerns about unclear implementation details through their International Mail Advisory Group (IMAG) and urged the government to provide clearer guidance.

Additionally, some Chinese e-commerce platforms have begun transferring inventory to local U.S. warehouses to bypass import tariffs, but this strategy is too costly for small and medium-sized sellers to emulate.

International Comparison and Legislative Trends

According to The New York Times, most countries worldwide have a de minimis system, but the U.S. threshold of $800 is one of the highest globally. Critics argue that the system has long been abused and should be tightened.

Currently, the U.S. Congress is reviewing several bills, including H.R. 322, which proposes lowering the de minimis threshold to $10 and expanding its application to all countries. If passed, it will further increase CBP's enforcement burden.

References

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