The US Postal Service (USPS) has announced a temporary suspension of parcel shipments from China and Hong Kong following President Donald Trump’s move to close a trade loophole. The decision comes after Trump imposed an additional 10 per cent tariff on Chinese goods and eliminated the “de minimis” provision, which previously allowed duty-free imports of packages worth less than $800.
Impact on Retailers Like Shein and Temu
Fast-fashion giant Shein and online discount store Temu have relied heavily on the de minimis exemption to fuel their rapid expansion in the US. According to a 2023 US congressional report, these two retailers accounted for over 30 per cent of de minimis shipments to the US Nearly half of all packages under this provision originated from China.
While USPS has not explicitly linked its suspension to the de minimis policy change, analysts believe the agency needs time to adapt to the new regulations. Chelsey Tam, senior equity analyst at Morningstar, highlighted the logistical challenge of processing 4 million de minimis packages per day.
Freight experts suggest that while the new tariffs may raise prices for Shein and Temu products, they are unlikely to significantly reduce shipment volumes. Niall van de Wouw, Chief Airfreight Officer at Xeneta, noted that despite regulatory changes, Chinese e-commerce volumes surged by 20-30 per cent in 2023. Delays caused by operational disruptions could impact consumer demand more than price increases.
Retailers Adapt to Policy Shifts
Shein and Temu are already diversifying their supply chains, opening US warehouses, and sourcing products from outside China to mitigate risks. However, the majority of their goods still originate from China.
Trump’s decision to impose tariffs aligns with his stance on curbing fentanyl imports from China, reinforcing broader US-China trade tensions.