BUSINESS

U.S. Tariff Relief Offers Limited Reprieve for Chinese Small-Parcel Exporters

By Boa Yunhong, Zou Xiaotong and Denise Jia

Published: May. 14, 2025 5:55 a.m. GMT+8

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A bin of small packages sits on a conveyor belt at the United Parcel Service Inc.’s Chicago Area Consolidation Hub in Hodgkins, Illinois, on Dec. 5, 2017. Photo: Bloomberg

The United States has slashed tariffs on small parcels from China, cutting ad valorem duties from 120% to 54% and canceling a planned increase in fixed charges per package. The move has led to cautious optimism among Chinese cross-border sellers, though structural constraints on direct shipping models such as Temu’s remain unresolved.

On May 12, the U.S. and China jointly announced they would roll back 91% of tariffs imposed during recent trade tensions, with both sides suspending 24% of “reciprocal” duties. The same day, President Donald Trump signed an executive order easing small-parcel tariffs — only weeks after raising them — and canceling a June 1 increase that would have doubled the fixed charge from $100 to $200 per package.

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The U.S. cut tariffs on small Chinese parcels from 120% to 54% and canceled a planned fee hike, but Chinese platforms like Temu and Shein still face hurdles after losing the “de minimis” duty exemption.
Product prices for Temu and Shein rose sharply (up to 51% in beauty and wellness), causing U.S. consumer spending to fall 23% on Shein and 17% on Temu between April 25 and May 1.
Stock markets responded positively, with Amazon up 8.07%, PDD Holdings 6.14%, and Alibaba 5.76% on May 12.

AI generated, for reference only

Who’s Who

Temu: Temu, a Chinese e-commerce platform, has been impacted by the end of the U.S. “de minimis” duty exemption and Entry Type 86, forcing it to shift from direct China-to-U.S. shipping to using American warehouses. Although tariffs on small parcels were reduced, Temu has removed many “fully managed” China-based listings, causing price hikes and a subsequent 17% drop in U.S. sales between April 25 and May 1.

Shein: Shein, a major Chinese e-commerce platform, has faced challenges after the U.S. revoked the “de minimis” duty exemption, impacting its direct shipping model. After price increases—beauty and wellness items up 51%, some kitchen towels 377%—Shein’s U.S. sales dropped 23% between April 25 and May 1. The company has had to rely more on American-based warehouses due to changes in customs rules and tariff policies.

Alibaba: According to the article, Alibaba’s shares climbed 5.76% on May 12 following the U.S. announcement cutting tariffs on small parcels from China. This stock increase reflected renewed investor confidence in cross-border retail as the easing measures were welcomed by the market.

AliExpress: The article notes that AliExpress, like Temu and Shein, was significantly impacted when the U.S. ended the “de minimis” Entry Type 86 exemption, disrupting direct-from-China shipping models. The loss of this exemption led to increased costs and changes in logistics, posing major challenges for cross-border e-commerce platforms including AliExpress.

Amazon: On May 12, following the U.S.-China announcement to ease tariffs, U.S. stock indices saw their largest single-day gains in over a month. Amazon's share price rose by 8.07%, returning to pre-tariff levels at $208.64, signaling renewed investor confidence in cross-border retail.

PDD Holdings: According to the article, PDD Holdings is the parent company of Temu. Following the U.S. announcement to ease small-parcel tariffs from China, PDD Holdings’ stock rose 6.14% on May 12, reflecting renewed investor confidence in cross-border retail businesses.

TikTok Shop: A U.S.-based TikTok Shop merchant estimated that, following the tariff reductions, product costs could decrease by 20%, potentially allowing them to lower final prices by up to 20%. This suggests that TikTok Shop sellers using overseas warehouses and general trade routes may benefit from the broader tariff cuts, despite ongoing challenges faced by direct-from-China shipping models.

AI generated, for reference only