GuShiio.com 
In a week, the cross-border e-commerce sector has experienced a roller-coaster of market ups and downs.
On February 8, U.S. President Trump signed a new executive order that will temporarily continue to allow packages of low-cost products from China to enter the United States duty-free.
This means that Trump overturned his policy of canceling the minimum tariff exemption for small packages from China worth less than US$800 in his decision to impose tariffs on China issued on February 1.
But this was obviously not a retreat, but a brief postponement. According to the latest administrative order, minimum tariff exemption treatment will continue to be implemented for goods from China until the Ministry of Commerce establishes sufficient systems to comprehensively and quickly process and collect tariff revenue.
In an executive order issued by the White House on February 1, it announced a new 10% tariff on imports from China and a new high 25% tariff on goods from Mexico and Canada.
Under the influence of this news, U.S. stocks and Chinese stocks turned from rising to falling, while New York gold futures hit a record high.
Trump is obviously prepared for this series of market reactions. When signing the executive order, he said he had said he understood that the tariffs could lead to higher costs being passed on to consumers and acknowledged that his actions could cause chaos in the short term.
Although many economists believe that this large-scale import tax will bring the global economy into chaos. But Trump still said the United States would impose more tariffs, including being considering imposing import taxes on European goods, as well as steel, aluminum, copper, pharmaceuticals and semiconductors. ldquo; We will impose tariffs on steel and aluminum, and eventually on copper, which will take longer to impose tariffs on copper.
Obviously, even after a brief setback, small packages below $800 have regained tariff exemption. But for the vast number of China businesses, it is only a matter of time before the tax increase is implemented.
A targeted defense
However, it is not easy for U.S. customs to collect taxes on the hundreds of thousands of packages shipped from China every day.
According to the new regulations, packages shipped from China to the United States must use formal customs clearance procedures, that is, additional information and customs duties must be provided before the package enters the country. This is obviously an extremely difficult challenge.
The complexity of the process is only one part of the huge workload, but the bigger challenge comes from the growing number of small packages.
Although the threshold for the minimum tariff exemption clause for small goods has been raised from US$200 in 2016 to US$800 today, the number of packages entering the United States under this exemption clause continues to surge.
According to “New York Times“reported that the United States imports nearly 4 million packages worth less than $800 every day. The packages require little customs inspection and no tariffs, and most of them come from China.
according toNomura HoldingsAccording to a study by 2010, low-value goods accounted for one-tenth of China’s total exports to the United States. Data from the U.S. Customs and Border Protection shows that the total number of packages entering the United States through this model reached 1.4 billion in fiscal year 2024, almost double the number in 2022.
Among them, the explosive growth of cross-border e-commerce platforms such as Shein and Temu in the United States has become one of the important driving forces for the rapid growth of parcel volume. According to data released by ShipMatrix and Supply Chain Dive, in July 2024 alone, these two e-commerce platforms delivered nearly 900,000 packages per day in the United States.
Orders from Temu and Shein even helped U.S. logistics giant UPS get out of its downturn. The financial report shows that UPS’s average daily order volume in the second quarter of 2024 increased by 0.7% year-on-year. Some experts said that the two companies are driving the rapid growth of UPS lightweight orders.
The release of the above policy triggered a series of chain reactions in the logistics industry in the United States. On the night that the above policy came into effect, the United States Postal Service (USPS) announced that it would suspend receiving packages sent from the mainland of China and China Hong Kong from February 4 until further notice. Immediately afterwards, on the morning of February 5, the U.S. Postal Service announced that it would continue to receive such packages.
Some analysts believe that the USPS process from suspension to resumption means that they also need time to figure out how to impose a new tax on China parcels.
Can the low-price strategy still work?
Although the policy has eased, changes have already occurred while waiting for the boots to land.
Many Temu and Shein users said that after this series of changes, prices for items that had already been added to their shopping carts increased significantly overnight, ranging from 10% to 30%.
Such tax rate changes may also affect the low-price strategies of e-commerce platforms such as Temu and Shein the U.S. market.
According to a report released by survey firm Probolsky Research in August 2024, 76% of respondents believe that Temu is more important than that.AmazonCheap. Temu’s pricing is highly competitive and is very attractive to budget-conscious shoppers. However, 81% of respondents also said Amazon delivers faster products.
However, low prices bring about continuous compression of profits, and the increase in tax rates may swallow up the already thin profits of China businesses. Therefore, some analysts said that one of the purposes of this tariff increase may also be to protect Amazon from low-cost competition from China’s e-commerce platforms.
Although my country’s General Administration of Customs issued on February 6 the relevant matters of the State Administration of Taxation on supporting the development of export tax rebates (exemptions) for cross-border e-commerce exports of overseas warehouses, it provides a variety of convenience conditions to support the development of new business formats and new models such as cross-border e-commerce exports of overseas warehouses. But to survive in the new tax environment, merchants obviously need to make more efforts.
Some merchants said that in the future, the business model of distributing goods at low prices and sending straight hair from China may be difficult to continue in the United States. It is necessary to change the logic of a single sales channel in the past, carry out multi-channel development, and increase overseas stocking efforts.
For this reason, for China merchants, this change in the U.S. tariff policy means that the traditional low-price model may enter a dead end. How to achieve better profits by improving product added value, product quality, logistics efficiency and consumer experience may become a challenge that must be faced next.(This article was first published on GuShiio.com Stock Market Smart APP, author| Xie Xuan, Editor| Fang Yu)
