US-China deal to slash tariffs also eases burden on cheap packages

Washington: Online shoppers in the US will see a price break on their purchases valued at less than $800 and shipped from China after the Trump administration reached a truce with Beijing over sky-high tariffs.

An executive order Monday from President Donald Trump said the tariffs on low-value parcels originating from China and coming through the US Postal Service will be lowered to 54 per cent, down from 120 per cent.

It also says a per-package flat rate — as an alternative to the value-based tariff — will be kept at $100, rather than being raised to $200 on June 1 as previously decreed. Packages shipped by commercial carriers are subject to the general tariff, which also has been cut.

The new rules go into effect Wednesday.

They are part of a broader agreement by the Trump administration to drastically lower import taxes on all Chinese goods from 145 per cent to 30 per cent following weekend talks in Switzerland with Chinese officials. China issued a public notice on Tuesday lowering its own tariffs on US goods to 10 per cent, down from 125 per cent.

However, the reductions are temporary, allowing the two sides to negotiate a longer-term deal in the next 90 days.

Izzy Rosenzweig, founder and CEO of the logistic company Portless, said US brands are “very excited” about the broader tariff cut. The import tax is still high, but not as prohibitive as when it was 145 per cent, which amounted to a trade embargo.

On the low-value shipments, online purchases had been coming into the US duty-free for several years under the de minimis rule, which exempted them from the import tax.

Popular shopping sites such as Shein and Temu that offer ultra-low prices took advantage of the duty-free rule by shipping directly from China to US buyers, bypassing more cumbersome customs paperwork.

President Donald Trump terminated the exemption on such parcels originating from China and Hong Kong on May 2, following criticism that it not only resulted in lost tariff revenue but also allowed illicit drugs and unsafe products to flow into the US without adequate scrutiny.

US Customs and Border Protection said as many as 4 million low-value parcels were coming into the US every day — many of which originated from China.

Shortly before the exemption ended on May 2, prices on many items sold by Shein rose. Temu apparently halted shipments from China and tapped its existing inventory in the US.

John Lash, group vice president of product strategy at the supply chain platform e2open, said he expected the volume of low-value packages would now rise but not back to previous levels. The $100 flat rate, he said, means that higher-value packages could get less of a hit, because the effective duty rate could be as low as 13 per cent.

Neither Shein nor Temu immediately responded to requests for comment Tuesday about the lower tariffs.