By Helen Reid
LONDON (Reuters) - The U.S. tariff exemption for small parcels ended on Friday, with some retailers stopping selling to U.S. customers while others seek temporary solutions in hopes that tariff rates can be lowered.
After the decision of US President Donald Trump last month, the "minimum" tax-free treatment for e-commerce packages was removed from products in China and Hong Kong - products originated from Chinese and Hong Kong, tariffs on most Chinese goods, tariffs on most Chinese goods, and tax-free treatment for e-commerce packages. The action subverted global trade and sparked revenge from Beijing.
The company said in a notice Wednesday that UK beauty product retailer Space NK has stopped e-commerce orders and shipped them to the U.S. “avoiding incorrect or paying additional fees for customer orders.”
This is not alone. A Vancouver-based company sells bras and lingerie in China, made in China, told customers in an Instagram post that it will no longer ship it to the U.S. due to tariffs, and said it will resume once it is clear.
"We will go from zero to 145%, which is really untenable for the company and untenable for the customers," said Cindy Allen, CEO of Trade Force Multiplier, a global trade consulting firm.
“I see a lot of SMEs just opting to exit the market altogether,” she added.
Prices rise
Players willing to continue entering the U.S. market are forced to raise their price tags.
Managing Director Mike Branney said the U.S. price has risen by 20% compared to other markets, and further price increases may have to be considered due to higher tariffs.
Singapore-based fast fashion giant Shein tried to assure customers in an article on its Instagram account Thursday, saying: "Some products may be priced differently than before, but most of our collections are still as affordable as ever." Shein sells clothes mainly made in China, and the United States is its largest market.
Temu, an international division of Chinese e-commerce giant PDD Holdings, has become famous in U.S. warehouses on its website, marked as "local" and the pop-up informed customers will have no import fees for local warehouse items.
"Now, all sales in the U.S. are processed by local sellers and orders are fulfilled from within the country," Temu said in a statement, adding that its price "stays the same" for U.S. customers.
But the imported projects before the May 2 change will eventually run out. Both Shein and Temu have cut spending on digital advertising in the U.S. over the past few weeks as they prepare for changes that could break into sales.
Shein did not immediately respond to a request for comment.
“E-commerce companies have been very good for a long time, and it’s an earthquake shift,” said Hugo Pakula, customs expert and CEO of TRU Identity, a trade automation platform. “If your inventory is not in the United States yet, selling it to the United States will be hurt.”
De Minimis was initially introduced into smooth international trade, but became a target of bipartisan criticism because of its role in promoting fentanyl ingredients from China and intensifying cheap clothes, toys and furniture made in China through online platforms such as Temu, Shein and Amazon Haul.
De Minimis is also a channel for counterfeit goods. In 2024, De Minimis cargoes account for 97% of the goods infringement related to infringement by Customs and Border Protection.
Without De Minimis, sellers of goods made in China will have to provide us with more detailed information about each component of the product, which increases the administrative burden and with the huge tariff costs it discourages small retailers.
UPS CEO Carol Tome said Tuesday that many of the company's small and medium-sized business customers have obtained 100% of the merchandise from China.
U.S. online marketplace Etsy said in a notice to sellers earlier this month that this makes it easier for them to clarify the country of origin of their products because tariffs are imposed based on the goods being made rather than where they are dispatched from.
While disruptive to e-commerce, minimum treatment for Chinese goods may make retailers less dependent on e-commerce or Chinese manufacturing.
British fast fashion retailer Primark sells clothes to U.S. customers only through stores across the country rather than online stores, and he says it can benefit from the change.
"As the price of this segment rises, I wonder if some Americans will start to go back to the mall and find value there," Primark owner and CEO of British Foods, told Reuters on Tuesday.
(Reported by Helen Reid, other reports by Amy Tennery, Lisa Baertlein, James Davey; Editor of Lisa Jucca