European Commission Proposes End to Duty Exemption Benefiting Online Retailers
The European Union seeks to eliminate the tariff exemption for low-value imports, affecting major e-commerce platforms like Shein and Temu amidst ongoing trade tensions with the United States.
On Wednesday, the European Commission put forth a proposal aimed at terminating the duty exemption for imports valued at less than 150 euros.
This exemption has notably benefited low-cost e-commerce platforms such as Shein and Temu, both of which have seen accelerated growth over the past two years.
This initiative is part of a broader reform of customs policy that the EU initially presented in May 2023, which is currently awaiting approval.
The proposed measures intend to fortify resources for more effective control, data sharing, and risk assessment at customs borders.
Included in the proposal is the establishment of a non-discriminatory processing fee for direct sales to European consumers.
The financial burden of this fee would fall upon retailers or sales platforms like Temu and Shein, aiming to bolster customs surveillance in light of the rising volume of such commerce.
According to data from the European Commission, 2023 saw approximately 4.6 billion low-cost shipments, equating to about 12 million packages daily that were exempt from tariffs due to their value not exceeding the 150-euro threshold.
As of 2023, Shein and Temu have been categorized among the largest online commerce platforms facing stringent oversight under the EU Digital Services Act.
Both companies are currently under investigation for allegedly failing to implement adequate measures to protect consumers—particularly minors—from harmful or illegal products.
Simultaneously, China accused the United States of 'suppressing' its companies amidst a backdrop of evolving trade policies.
The United States Postal Service (USPS) announced on Tuesday it would 'temporarily' suspend the acceptance of packages from mainland China and Hong Kong.
However, on Wednesday, USPS reversed its decision and confirmed it would continue to accept such mail.
China's Ministry of Foreign Affairs criticized the U.S. actions, urging Washington to refrain from politicizing trade matters and to cease what it described as the unreasonable suppression of Chinese companies.
Previously, the U.S. also canceled its low-value package exemption, a policy established during the Trump administration, which allowed goods valued under $800 to enter the country without incurring tariffs or taxes.
U.S. officials contend that this exemption disproportionately favored Chinese-founded online retail platforms.
The U.S. Customs and Border Protection agency reported that the value of packages benefiting from this exemption was over $1.36 billion in 2024 alone.
Washington's stance is that the low-value package exemption complicated the enforcement of health, safety, and intellectual property regulations in the U.S.
The proposed end to this exemption may significantly impact platforms such as Shein and Temu, known for their discount pricing, and further hinder China's foreign trade, a critical component of its economy amid sluggish domestic consumption.
Other enterprises, including American giant Amazon, may also face repercussions.
In response to these developments, China has indicated that it will implement retaliatory measures targeting approximately $20 billion worth of U.S. goods, accounting for roughly 12% of total U.S. imports, according to estimates from Capital Economics.
However, the impact of these measures is projected to be considerably less than the additional tariffs imposed by the U.S., which currently affect about $450 billion in goods.
This exemption has notably benefited low-cost e-commerce platforms such as Shein and Temu, both of which have seen accelerated growth over the past two years.
This initiative is part of a broader reform of customs policy that the EU initially presented in May 2023, which is currently awaiting approval.
The proposed measures intend to fortify resources for more effective control, data sharing, and risk assessment at customs borders.
Included in the proposal is the establishment of a non-discriminatory processing fee for direct sales to European consumers.
The financial burden of this fee would fall upon retailers or sales platforms like Temu and Shein, aiming to bolster customs surveillance in light of the rising volume of such commerce.
According to data from the European Commission, 2023 saw approximately 4.6 billion low-cost shipments, equating to about 12 million packages daily that were exempt from tariffs due to their value not exceeding the 150-euro threshold.
As of 2023, Shein and Temu have been categorized among the largest online commerce platforms facing stringent oversight under the EU Digital Services Act.
Both companies are currently under investigation for allegedly failing to implement adequate measures to protect consumers—particularly minors—from harmful or illegal products.
Simultaneously, China accused the United States of 'suppressing' its companies amidst a backdrop of evolving trade policies.
The United States Postal Service (USPS) announced on Tuesday it would 'temporarily' suspend the acceptance of packages from mainland China and Hong Kong.
However, on Wednesday, USPS reversed its decision and confirmed it would continue to accept such mail.
China's Ministry of Foreign Affairs criticized the U.S. actions, urging Washington to refrain from politicizing trade matters and to cease what it described as the unreasonable suppression of Chinese companies.
Previously, the U.S. also canceled its low-value package exemption, a policy established during the Trump administration, which allowed goods valued under $800 to enter the country without incurring tariffs or taxes.
U.S. officials contend that this exemption disproportionately favored Chinese-founded online retail platforms.
The U.S. Customs and Border Protection agency reported that the value of packages benefiting from this exemption was over $1.36 billion in 2024 alone.
Washington's stance is that the low-value package exemption complicated the enforcement of health, safety, and intellectual property regulations in the U.S.
The proposed end to this exemption may significantly impact platforms such as Shein and Temu, known for their discount pricing, and further hinder China's foreign trade, a critical component of its economy amid sluggish domestic consumption.
Other enterprises, including American giant Amazon, may also face repercussions.
In response to these developments, China has indicated that it will implement retaliatory measures targeting approximately $20 billion worth of U.S. goods, accounting for roughly 12% of total U.S. imports, according to estimates from Capital Economics.
However, the impact of these measures is projected to be considerably less than the additional tariffs imposed by the U.S., which currently affect about $450 billion in goods.
