China low-value package tariff exemption ends but questions remain over US collections

CNA

02-05-2025

WASHINGTON: The Trump administration ended United States duty-free access for low-value shipments from China and Hong Kong on Friday (May 2), removing the "de minimis" exemptions availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.
The action restores an executive order from President Donald Trump in February that was quickly suspended due to a lack of screening procedures for sub-US$800 shipments that sparked chaos at airports and caused millions of packages to pile up.
US Customs and Border Protection (CBP) has "a massive task at hand" but is ready to handle the enforcement and collection of Trump's tariffs on small Chinese shipments, a spokesperson for the agency said.
"We are prepared and equipped to carry out enhanced package screening and enforce orders effectively as outlined" in Trump's executive order ending de minimis treatment for China, the spokesperson added.
The new procedures should not affect passenger wait times at airports and ports of entry, the spokesperson said.
The packages are handled in the cargo section of airports, even when they arrive in the bellies of passenger planes.
Under CBP's latest guidance, shipments from China and Hong Kong, regardless of size, will now be subject to Trump's new tariffs of 145 per cent plus any prior duties, except for products such as smartphones, which were excluded last month.
These will largely be handled by express shippers such as FedEx, United Parcel Service or DHL, which have their own cargo handling facilities.
Items valued at up to US$800 and sent from China via postal services are treated differently. They are now subject to a tax of 120 per cent of the package's value or a flat fee of US$100 per package - an amount that rises to US$200 in June.
COLLECTIONS AT TAKE-OFF
The US Postal Service (USPS) said it would not be involved in any duty collections. Instead, a USPS spokesperson said airlines and vessel operators would need to work with shippers and Chinese postal authorities to pay the import taxes and show proof before the goods are transported out of China or Hong Kong.
Although de minimis is a Latin term referring to matters of little importance, low-value shipments from China to the US reached an estimated US$5.1 billion in 2024, according to US Census Bureau data.
That made it the seventh-largest US import category from China, behind video game consoles, but just ahead of computer monitors.
Shippers were bracing for more package chaos, and some questioned whether airlines were prepared to handle duty collection from China Post and Hongkong Post.
"We have the same worry about bottlenecks," said Kate Muth, executive director of the International Mailers Advisory Group (IMAG), whose members include Amazon.com, eBay and divisions of United Parcel Service, FedEx and DHL.
"I don't think we're ready for the change because we're still awaiting some clarification around the rules," including how to define Chinese origin for goods that are shipped from other countries, Muth said.
The end of de minimis and high US tariffs on Chinese goods are likely to dent international air cargo traffic, which had been surging as US shoppers bought more from platforms like Shein and Temu.
International air cargo traffic grew by 12.3 per cent last year but that growth rate will likely collapse to between -0.1 per cent and 0.7 per cent this year, according to Frederic Horst, managing director of Sydney-based consultancy Trade and Transport Group, as fewer products get shipped by air from China to the US and the global economy weakens.
"It's a big problem for those carriers that are operating on those markets, and from carriers that I've talked to recently there's a lot of cancellations that are happening right now for the next one or two weeks," Horst said.
De minimis packages account for around one-third of the total air cargo tonnes coming to the US from Asia, and that trade volume could drop by 75 per cent this year, Trade and Transport Group estimates.
FORMAL ENTRY SHIFT
A late change in the CBP's guidance took away a major complication for shippers, but created a potential new hurdle to enforcement as CBP temporarily suspended a rule that would have required formal customs entry for all shipments valued at over US$250 containing goods that are also subject to punitive tariffs.
Formal customs entry, normally associated with larger, containerised cargo, requires full 10-digit tariff codes for all items, advance electronic transmission of entry data and a bond to cover customs liability.
It would have applied to many other countries now subject to US tariffs imposed by Trump, creating a potential new crush of administrative paperwork for shippers.
Instead, the suspension allows the use of informal entry procedures for shipments from China and Hong Kong valued at up to US$800 and up to US$2,500 from elsewhere, requiring no tariff codes and a less detailed contents description.
Lori Wallach, director of Rethink Trade, which has advocated an end to the de minimis exemption, said the use of informal entry would make it harder to screen packages.
"Without it being electronic or having an HTS code, the whole system that's used to inspect and to prioritise things that should be pulled for inspection doesn't work," Wallach said.