Donald Trump kills China tariff-free shipping

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From smaller retail operations to third-party logistics providers, Canadian companies will soon begin to deliver low-value goods from China and low-value goods from Hong Kong to the United States.

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In a Wednesday executive order, US President Donald Trump declared that he was eliminating the “de minimum” trade provision for goods originating from China and Hong Kong starting on May 2. The trade rule, also called Section 321, allowed goods valued at US$800 and under to enter the US duty-free, allowing bargain e-commerce sites such as China’s Shein and Temu to rapidly expand in the US in recent years. About 4 million low-value goods enter the United States every day.

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Trump initially removed the rule in February, but revoked his order the same month until the administration can implement a new system to collect revenue. The White House is now considering creating an “external tax service” to collect new tariff revenues.

Although Trump’s orders are only available for China and Hong Kong-Odin products, it will have a ripple effect across the global e-commerce and transportation industry, forcing companies to overhaul its implementation and manufacturing strategies.

Under the new trade rules, all low-value imports originating from China and Hong Kong (even through Canada or Mexico) will be subject to duties and taxes when entering the United States through Canada or Mexico, under the new trade rules.

According to the U.S. Customs and Border Protection, in 2024, approximately 1.36 billion goods entered the U.S. under the Minimum Rules, an increase of 114% over the past four years. Canada is the third largest source of goods in the United States, accounting for low-priced imports worth about $5 billion in 2021.

This change will hit the discount market for shipments from China, with its business model depending on the minimum exception. Companies that have moved to the model in recent years – from Chinese e-commerce platforms to US giant Amazon.com Inc. to smaller clothing companies in Canada – will be forced to transfer and ship in batches to the United States, increasing costs for companies and consumers, and supply chain security and resilience security in BSI consulting firms.

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“The cost of smaller batches will be less than every smaller cargo request,” Paley said.

Now, companies will need to pay a 16% tariff on low-value projects that previously qualify for Minimis; 10% tariffs on U.S. benchmarks; an additional 7.5% levied from Chinese products; Pelley said, in addition to the 34% tariff on Chinese currency commodities announced on Wednesday, adding that it is not clear how the latest tariffs will be implemented.

“The expense of hiring a customs broker or developing in-house expertise also has costs to ensure that in addition to potential warehousing expenses, the tariffs are applied correctly,” he said.

Some companies explore diversifying their suppliers and manufacturing bases. However, the latest round of global tariffs in the U.S. (including Vietnam’s tariff rate of 46%, one of the highest “reciprocal” rates) could slow down any outsourcing to Vietnam and other manufacturing hubs, such as Bangladesh and Thailand, which will have 37% consultants and 36% consultants, respectively, said the consultants received 30% attention, respectively.

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Globally, international air cargo airlines will be forced to re-deploy their global air fleets to other markets, the loss said. He predicts that the industry will suffer a $3 billion hit “due to this evolving shift, in “loss of revenue for airlines and cargo personnel.”

The process of goods flowing into the United States will also slow down. The loss said that customs inspections will become more delicate given that “cargoes entering the United States require deeper data classification” without De Minimis’s provision. “More friction… will reduce delivery of goods by one to two days.”

The cancellation of Trump’s de minimis could cause other economies to commit in-kind retaliation, and the EU is considering eliminating its own minimum exemption.

“The EU is concerned that this has allowed companies to avoid strict safety, environmental and intellectual property laws. There are some signs that the UK can follow, too,” Paley said.

In 2024, about 4.6 billion low-value goods entered the EU market, tripling in two years.

•Email: ylau@postmedia.com

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