Tariff Tango Trump Pauses Tariffs on Low-Value Packages from China Let me know if you have any other questions or if there's anything else I can help with!

Tariff Tango Trump Pauses Tariffs on Low-Value Packages from China

President Donald Trump has issued an executive order to pause imposing tariffs on small-value packages arriving from China. This temporary reprieve aims to give federal agencies time to develop a system for processing and collecting tariff revenue.

A Pause in the Evolution of Trump's Tariff Policy

The executive order, dated Wednesday, does not specify when the pause will end, but it will cease once the Department of Commerce can establish adequate systems to process and collect tariff revenue fully and expeditiously.

Industry Insights The Complexity of the Issue

John Lash, group vice president of product strategy at supply chain platform e2open, notes that the volumes of small packages arriving from China are absolutely incredible. He adds that requiring full filing for these shipments is a complicated task. This complexity stems from the sudden change in regulations, which has gone from not requiring filing to requiring full filing.

Bipartisan Support and Previous Policy Shifts

The decision to end tariff exemptions on low-cost packages from China enjoys broad bipartisan support. Trump's earlier move to raise tariffs on Chinese goods by 10% prompted this change. The new tariffs apply not only to existing tariffs (25% for many Chinese products) but also the additional 10%.

A Shift in Policy Similarities with Previous Decisions

This pause marks another shift in President Trump's policies, following orders to impose tariffs on Mexico and Canada, which were subsequently suspended after the two countries took steps to address his concerns about border security and drug trafficking.

The Role of the U.S. Postal Service

The U.S. Postal Service initially announced it would not accept parcels from mainland China and Hong Kong due to the new tariffs. However, it later reversed this decision, stating that it would work with Customs and Border Protection to implement a collection process for the new tariffs.

A Complex Problem The Need for Preparation

John Lash notes that implementing any change quickly can catch people off guard, emphasizing the need for preparation in this complex issue.

Background on the De Minimis Exception

Introduced in 1938, the de minimis exception aimed to facilitate the flow of small packages valued at no more than $5 (approximately $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 intent of this decades-old customs exception rule.

The Impact on Cross-Border E-Commerce

Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a Congressional Research Service report. The U.S. market has been a major destination for these shipments.

A New Era in Tariffs The Future of Cross-Border E-Commerce

In 2023, for the first time, more than 1 billion small packages came through U.S. customs, up from 134 million in 2015. By the end of last year, Customs and Border Protection was processing approximately 4 million such shipments daily, many of which originated from China through online retail platforms like Shein and Temu.

Conclusion

The temporary pause on tariffs for low-value packages from China may provide a brief reprieve, but ultimately, it will have far-reaching consequences for the cross-border e-commerce model. As costs rise due to tariffs and filing paperwork, overseas sellers may turn to bulk shipping, fundamentally changing the market.

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.