Trump targets loophole Temu, Shein used to take on Amazon
President Donald Trump’s new trade levies against China, Canada and Mexico include a broadside against international e-commerce, with apparent plans to extinguish a long-held tariff exemption for packages worth less than US$800.
Trump’s executive orders directing 25 per cent levies on Canada and Mexico — plus a 10 per cent duty on China — specify that the “de minimis” exemption for small packages no longer applies. Under the exemption, products below that dollar amount are able to enter the U.S. without tariffs — a boon for China’s e-commerce retailers who ship often cheaper wares directly to consumers in the U.S.
Washington is taking aim at a loophole that retailers from PDD Holdings Inc.’s Temu to fashion-focused Shein have exploited for years to expand rapidly in the United States. That’s given Chinese-linked e-commerce companies — which grew by hawking smaller packages in much higher volumes to consumers — huge advantages over market incumbents such as Amazon.com Inc. Critics say the flood of parcels from China is hard to monitor and may contain illegal or dangerous goods.
Trump’s decision — while earlier than some analysts expected — had been largely anticipated by Temu and Shein. Since last year, they’ve begun diversifying their logistics chains, expanding networks in the U.S. and moving to bigger bulk orders.
Still, a formal closure is expected to hit a fast-growing market segment. Temu U.S. accounts for a low-teen percentage of PDD’s revenue, Jefferies has estimated. Alibaba Group Holding Ltd. and JD.com Inc. have thriving U.S. businesses. And it raises questions about Shein’s highly anticipated initial public offering, a mega-debut investors expect to take place as soon as this year.
PDD’s shares dropped about
Read more on financialpost.com
