Trade war: Proposed US legislation puts China’s cross-border e-commerce sector in cross hairs, hitting Temu and Shein
- Bipartisan US bills target the de minimis trade exemption that allows low-value goods to be sent from Chinese shippers to US customers duty-free
- Experts say change could cut into Temu and Shein’s price competitiveness, although few platforms are in a position to challenge them
As China’s cross-border e-commerce market grows, aided by the overseas success of budget e-commerce apps like Temu and Shein, some US government representatives are pushing for the removal of a valuable trade exemption for Chinese shippers, in a move that could potentially harm their price advantages.
Bipartisan bills were introduced to the US Congress last week that sponsors say would target China’s e-commerce sector by revising a “loophole” that allows millions of low-value Chinese shipments to enter the country duty-free each day.
The exception in question, known as the de minimis rule, exempts imports valued at US$800 or less from tariffs if the items are shipped to individual consumers. If it is repealed for Chinese imports, experts say it could affect the bottom line of online shopping platforms like fast-fashion giant Shein and PDD Holdings’ Temu, which ship from China.
“It would increase the operational cost for cross-border e-commerce companies, putting them in a disadvantageous position in global competition,” said Zhang Zhouping, an analyst focusing on transborder e-commerce at Hangzhou-based market consultancy 100ec.cn.
As part of the US-China trade war, an additional 25 per cent tariff was placed on a wide range of Chinese imports in addition to existing duties starting in 2019. Zhang said if Temu and Shein had to pay this, it would likely be passed on to US consumers through increased prices.