President Donald Trump has suspended enforcing tariffs on small-value packages arriving from China. The move provides time for government agencies to figure out how to deal with millions of these shipments per day that have entered the US border without paying duties. Trump's executive order, dated Wednesday, didn't specify when the pause would end but said it would stop once the Department of Commerce could put in place adequate systems to fully and promptly collect and process tariff revenue. It shows that we are moving fast, and the implications aren't fully understood with some of these regulations being implemented, stated John Lash, head of product strategy at supply chain platform e2open. He emphasized that Trump's order affected massive numbers of small parcels, many in transit. The volumes are truly staggering, Lash said. And suddenly, they move from not requiring filing (for tariffs) ... to actually needing full filing, which is a complicated task. There was bipartisan support for ending the tariff exemptions on low-cost packages from China in Washington, and Trump pulled the plug when he increased tariffs on Chinese goods by 10% earlier this week. Goods sent through duty-free parcels became subject not only to existing tariffs - 25% for many Chinese products - but also the new 10%. It represents another pause on Trump's policies weeks into his second term, including orders to impose tariffs on Mexico and Canada that were suspended after the two allies took steps to meet his concerns about border security and drug trafficking. The U.S. Postal Service (USPS), which would be burdened with collecting taxes on small packages, announced Tuesday it wouldn't accept parcels from mainland China and Hong Kong. It reversed its decision the following day, stating it would work with Customs and Border Protection to implement a collection process for the new tariffs. It's one of those things where you put in any change so quickly that catches people off guard, Lash said. The so-called de minimis exception was introduced in 1938. It aimed to facilitate the flow of small packages valued at no more than $5, equivalent to about $106 today. The threshold increased to $200 in 1994 and $800 in 2016. However, the rapid rise of cross-border e-commerce, driven by China, has challenged the purpose of the decades-old customs exception rule. Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a report released last week by the Congressional Research Service. And the U.S. market has been a significant destination. In 2023, for the first time, more than one billion such parcels came through U.S. customs, up from 134 million in 2015. By the end of last year, Customs and Border Protection stated it was processing about 4 million small shipments daily, many coming from China via online retail platforms like Shein and Temu. Critics contended that this practice allowed not only tariff evasion but also the flow of unsafe products such as counterfeits and illicit drugs into the U.S. Supporters argued that it helped keep prices affordable for U.S. consumers and small businesses. After Trump threw out the exemption, some analysts noted that the policy shift could lead to higher prices and delivery delays as U.S. customs officials cope with an onslaught of packages to scrutinize. We're talking about millions of packages every week that currently get treated like domestic shipping, said Neil Saunders, a managing director at research firm GlobalData. He mentioned Temu had already adjusted by increasing its warehousing capabilities in the U.S. during the past year and shipping products in containers. Lash stated that the de minimis exception rule's end would transform the cross-border e-commerce model when tariffs and filing paperwork drive up costs, prompting overseas sellers to turn to bulk shipping.

President Donald Trump has suspended enforcing tariffs on small-value packages arriving from China. The move provides time for government agencies to figure out how to deal with millions of these shipments per day that have entered the US border without paying duties. Trump's executive order, dated Wednesday, didn't specify when the pause would end but said it would stop once the Department of Commerce could put in place adequate systems to fully and promptly collect and process tariff revenue. It shows that we are moving fast, and the implications aren't fully understood with some of these regulations being implemented, stated John Lash, head of product strategy at supply chain platform e2open. He emphasized that Trump's order affected massive numbers of small parcels, many in transit. The volumes are truly staggering, Lash said. And suddenly, they move from not requiring filing (for tariffs) ... to actually needing full filing, which is a complicated task. There was bipartisan support for ending the tariff exemptions on low-cost packages from China in Washington, and Trump pulled the plug when he increased tariffs on Chinese goods by 10% earlier this week. Goods sent through duty-free parcels became subject not only to existing tariffs - 25% for many Chinese products - but also the new 10%. It represents another pause on Trump's policies weeks into his second term, including orders to impose tariffs on Mexico and Canada that were suspended after the two allies took steps to meet his concerns about border security and drug trafficking. The U.S. Postal Service (USPS), which would be burdened with collecting taxes on small packages, announced Tuesday it wouldn't accept parcels from mainland China and Hong Kong. It reversed its decision the following day, stating it would work with Customs and Border Protection to implement a collection process for the new tariffs. It's one of those things where you put in any change so quickly that catches people off guard, Lash said. The so-called de minimis exception was introduced in 1938. It aimed to facilitate the flow of small packages valued at no more than $5, equivalent to about $106 today. The threshold increased to $200 in 1994 and $800 in 2016. However, the rapid rise of cross-border e-commerce, driven by China, has challenged the purpose of the decades-old customs exception rule. Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a report released last week by the Congressional Research Service. And the U.S. market has been a significant destination. In 2023, for the first time, more than one billion such parcels came through U.S. customs, up from 134 million in 2015. By the end of last year, Customs and Border Protection stated it was processing about 4 million small shipments daily, many coming from China via online retail platforms like Shein and Temu. Critics contended that this practice allowed not only tariff evasion but also the flow of unsafe products such as counterfeits and illicit drugs into the U.S. Supporters argued that it helped keep prices affordable for U.S. consumers and small businesses. After Trump threw out the exemption, some analysts noted that the policy shift could lead to higher prices and delivery delays as U.S. customs officials cope with an onslaught of packages to scrutinize. We're talking about millions of packages every week that currently get treated like domestic shipping, said Neil Saunders, a managing director at research firm GlobalData. He mentioned Temu had already adjusted by increasing its warehousing capabilities in the U.S. during the past year and shipping products in containers. Lash stated that the de minimis exception rule's end would transform the cross-border e-commerce model when tariffs and filing paperwork drive up costs, prompting overseas sellers to turn to bulk shipping.