US slashes 'de minimis' tariff on small China parcels to 54%

The United States will cut the "de minimis" tariff for low-value items imported from China, a White House executive order said on Monday, further de-escalating a potentially damaging trade war between the world's two largest economies.

The tariff relief, which affects big Chinese e-commerce players including Shein and Temu, follows a deal between the two countries to unwind most of the duties imposed on each other's goods since early April, after weekend talks in Geneva.

While their joint statement in Geneva didn't mention the de minimis duties, the White House order released later said the levies will be reduced to 54 percent from 120 percent for items valued at up to US$800 sent from China via postal services, with a flat fee of US$100 to remain, starting from May 14.

Carriers can pay either the 54 percent or the US$100 fee per package, industry experts said. The logistics companies or freight forwarders collect those tariff fees from sellers in China in advance.

The de minimis exemption allowed items valued at up to US$800 and sent from China via postal service to previously enter the United States duty free and with minimal inspections.

In February, US President Donald Trump ended the de minimis exemption by imposing a tax of 120 percent of the package's value or a planned flat fee of US$200 – set to come into effect by June – blaming it for being heavily used by companies such as Shein, Temu and other e-commerce firms.

The number of shipments entering the US through the tax-free channel exploded in recent years with more than 90 percent of all packages coming via de minimis. Of those, about 60 percent came from China, led by direct-to-consumer retailers such as Temu and Shein.

In Monday's order, the White House said the reduced tariffs will take effect by 12:01am on May 14, 2025.

The plan for a US$200 flat fee duty rate would also be shelved, it said, keeping it at US$100.

Jianlong Hu, CEO of Brands Factory, a Chinese cross-border e-commerce consultancy, said 54 percent was still very high.

"Sellers are probably taking a wait-and-see approach but in general I think it's fair to say the boom times of small package delivery from China to the US, the Golden Age is already gone."

Shein is more exposed to de minimis changes due to its reliance on speed of getting thousands of new styles each week to consumers in the West by air than others such as Temu.

Shein might still be one player that would want to air freight some packages from China and pay the 54 percent tariffs rather than import all by boat, said Hu.

"If people are buying clothes on Shein and are told the product will arrive one month later, who will buy that?"

"I think companies that were part of the cross-border boom from China will still want to diversify their business away from the US as much as they can. Everyone has already realized if you depend on the US, it's too risky," said Hu.