Trump moves to tax parcels; some retailers give up on US
LONDON—As the United States ends a tariff exemption for small parcels on Friday, some retailers have stopped selling to US customers while others are seeking temporary workarounds in the hope the tariff rate may be reduced.
The removal of “de minimis”—duty-free treatment of e-commerce packages worth less than $800—for products originating from China and Hong Kong exposes those goods to tariffs of 145 percent on most Chinese goods following US President Donald Trump’s decision last month. The move upended global trade and triggered retaliation from Beijing.
British beauty products retailer Space NK has paused e-commerce orders and shipping to the United States “to avoid incorrect or additional costs being applied to our customers’ orders,” the company said in a notice on Wednesday.
It is not alone. Understance, a Vancouver-based company that sells bras and underwear manufactured in China, told customers in an Instagram post that it would no longer ship to the United States due to the tariffs, saying it will resume once there is clarity.
Price hikes under way
“We’re going from zero to 145 percent, which is really untenable for companies and untenable for customers,” said Cindy Allen, CEO of Trade Force Multiplier, a global trade consultancy.
“I’ve seen a lot of small to medium-sized businesses just choose to exit the market altogether,” she added.
Import charges can vary depending on shipment methods. For goods handled by the US Postal Service, the tariff will be 120 percent of their value, or $100 per package. The amount is due to increase to $200 in June, according to implementation guidance from US Customs and Border Protection.
Players willing to continue to access the US market are forced to hike their price tags.
Oh Polly, a British clothing retailer, has increased prices in the US by 20 percent compared to its other markets, and may have to consider further price increases because of the higher tariffs, said managing director Mike Branney.
Singapore-based fast-fashion giant Shein sought to reassure customers in a post on Instagram on Thursday, saying: “Some products may be priced differently than before, but the majority of our collections remain as affordable as ever.” Shein sells clothes mostly manufactured in China and the US is its biggest market.
Temu, the international arm of Chinese e-commerce giant PDD Holdings, prominently featured products already in US warehouses on its website, labeled “local,” and a pop-up informed customers there would be no import charges for local warehouse items.
“All sales in the US are now handled by locally based sellers, with orders fulfilled from within the country,” Temu said in a statement, adding that its pricing for US customers “remains unchanged.”
But items imported before the May 2 change will eventually run out. Both Shein and Temu have slashed their US digital advertising spending in the past weeks as they prepared for the change that is likely to hit their sales.
