The US has agreed to slash its tariffs on low-value Chinese imports as part of the temporary agreement it struck with China yesterday.
Reuters reports today that the US will cut its tariff on Chinese shipments from 120% to 54%, while a planned flat fee of US$200 will be reduced to $100. This still marks a change from the start of the year, when Chinese shipments could be sent via postal services with no duty levied.
The end of the ‘de minimis’ policy was in part a response to the growth of Chinese e-commerce giants Shein and Temu. It was initially introduced to allow those returning to the US with cheap goods to do so without declaring those goods to customs. The exception – which accounted for goods worth up to $5 when introduced in the 1930s – allowed goods worth up to $800 to enter the US tariff-free before Trump ended it in February.
Trade truce
As noted by the Guardian, shipments of low-value goods to the US have increased rapidly in recent years. Over 90% of all packages sent to the country arrived via de minimis before it was scrapped, and around 60% of those packages were from China. It is this rule that has allowed Temu and Shein to expand in the US market.
Some firms have welcomed the pause in escalation in the US-China trade war, with UK makeup firm Revolution Beauty, for instance, saying it “very much” welcomes the change. It is an example of how the movement of goods between China and the US affects companies elsewhere, with over 60% of Revolution Beauty’s US-sold goods manufactured in the Asian nation.
Global stocks have been similarly buoyed by the truce. The S&P 500 closed higher than at any point since early March yesterday and the Nasdaq index hit its highest close since February.
Potential effects
Marco Forgione, the director general of the Chartered Institute of Export & International Trade, told Sky News earlier this year that the de minimis change could have major implications for the US economy.
“The removal of de minimis will see prices increase and more pressure on the US economy.
“Already, the amount of ships from China heading into the US has dropped off significantly. The amount of air freight is also dropping in advance of de minimis and we’re seeing a diversion of where goods are going.”
The UK and EU are also reviewing their own de minimis policies as concerns grow about the dumping of cheap Chinese goods in these markets in response to the US changes. The chief executive of Currys is among those who have expressed fears that these shifts could have dramatic consequences for UK firms.
Chinese shipping to Europe increased by 28% in the first quarter of 2025, and the EU has resolved to end its de minimis scheme by 2028. The UK has not committed to ending its scheme, but it has launched a formal review.
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