China low-value package exemption ends with questions over US tariff collections, logistics

The United States officially ended a tariff exemption on low-value shipments from China on Tuesday, but industry experts and government officials are raising concerns about the practical challenges of enforcement and the potential economic implications of this policy shift.

Policy Change Details and Timeline

The policy change eliminates the “de minimis” exemption that previously allowed packages valued under $800 to enter the United States without tariffs when shipped directly to consumers. This exemption had become increasingly significant with the rise of e-commerce giants like Temu and Shein, which have built their business models around shipping millions of small packages directly to American customers.

The termination of this exemption forms part of a broader effort by the Biden administration to address concerns about unfair trade practices and was announced on May 14, with the change officially taking effect on Tuesday.

Enforcement Challenges Ahead

Despite the formal implementation of the policy, significant questions remain about the U.S. government’s capability to effectively enforce these new regulations. The sheer volume of packages — with over 685 million de minimis shipments entering the country in fiscal year 2022 alone — presents a formidable logistical challenge for Customs and Border Protection (CBP).

Former CBP Acting Commissioner Robert Perez highlighted these concerns, stating: “The math here reveals that there just isn’t enough personnel to properly handle this volume of packages.”

Perez further elaborated on the scope of the challenge: “Even a minimal amount of time – say 1-2 minutes per package to handle, review, assess, make a determination of what duties apply, and then collect those duties… How many personnel would you need times 2 million packages a day?”

Economic and Market Implications

The policy shift could potentially impact the business models of popular Chinese e-commerce platforms that have gained significant market share in the United States through low-priced merchandise. Temu and Shein, which together account for a substantial portion of these small shipments, now face the prospect of either absorbing the additional costs or passing them on to consumers.

Market analysts suggest this change could affect pricing strategies for these platforms, potentially diminishing their competitive advantage against domestic retailers who have complained about the uneven playing field created by the de minimis exemption.

Strategic Response from Chinese Platforms

Chinese e-commerce platforms have been preparing for this regulatory shift. Temu has reportedly been exploring the establishment of fulfillment centers in Mexico and has introduced a “Fulfilled by Temu” service allowing U.S.-based sellers to use its platform.

Meanwhile, Shein has been working to diversify its manufacturing base beyond China, with expanding operations in countries including Brazil, India, and Turkey.

Future Implementation Outlook

As the tariffs officially take effect, stakeholders across the e-commerce ecosystem are watching closely to see how enforcement will unfold in practice. The U.S. government faces the dual challenge of implementing the new policy effectively while managing the significant operational demands it creates.

A CBP spokesperson indicated that the agency “continues to work on regulatory implementation” of the policy change, suggesting that the full enforcement framework is still evolving.

The agency has previously acknowledged the challenge it faces, with CBP Executive Assistant Commissioner AnnMarie Highsmith testifying in April that “de minimis presents significant challenges for the effective enforcement of U.S. trade laws.”

Trade experts and industry observers note that the coming months will be crucial in determining whether this policy change achieves its intended effects or whether practical limitations in enforcement might blunt its impact on cross-border e-commerce patterns.