Editor’s note: Reverse, and then reverse: first, the Donald Trump administration on the 4th of this month imposed a 10% tariff on Chinese goods and eliminated the tariff exemption for small packages under $800; Donald Trump yesterday signed an executive order suspending taxes on small postal parcels as businesses grappled with the cost of the duties. This makes the mindset of China’s cross-border ecommerce practitioners like“Riding a roller coaster”.
“Never thought such a big country would play games with trade.”
On the first working day after the spring festival holiday in the year of the snake, many practitioners in the cross-border e-commerce industry between China and the United States had just returned to the office when they caught a storm. Local 4, the US imposed a 10% tariff on Chinese goods and removed less than $800“Low-value goods” tariff exemption. At the same time, the United States Postal Service also announced it was suspending shipments from mainland China and Hong Kong. Within days, however, the situation had taken a“Sudden turn”, with the removal of the most popular tax exemption for small packages under $800 being suspended. “I never thought such a big country could change its order so quickly and treat the hundreds of millions or even zero of dollars of trade every day as a joke,” a cross-border e-commerce practitioner lamented to the global times.
Gu Tao, a businessman who sells small furniture to the United States on Amazon’s platform, gave an example to a reporter from the global times on the 8th, in the past, some domestic businesses to U. S. consumers directly send packages under $800 without customs declaration, regardless of category all duty-free. Once the exemption is removed, these goods will be taxed, and the tax rate will be increased by 10% , which means that the competitiveness of Chinese goods will be reduced.
However, Gu says many practitioners like him believe business has been relatively unaffected, mainly because of the different models of co-operation between merchants and ecommerce platforms. Gu’s store on Amazon’s platform operates as a Fulfillment By Amazon (FBA) store, where merchandise is shipped in bulk to warehouses run By Amazon, after the customer orders, the platform is responsible for order sorting, packaging and distribution. Under this mode of operation, he sends hundreds and thousands of pieces at a time, and exports them in the form of normal trade, which itself does not meet the duty-free conditions for small packages under $800, nor does it rely on this policy for profit margins. Under the new U. S. tariff policy, he expected to sell goods mainly affected by the 10% tariff increase, but with the product itself obvious value-for-money advantage, the increase is acceptable.
In addition to Amazon, China’s cross-border e-commerce platform Temu, Shein and other similar business model. For example, under the TEMU semi-custodial model, merchants are required to stock goods in overseas warehouses in advance and adopt a routine customs declaration process. This time, the main impact is also a 10% tariff increase. Corresponding to the above model is the merchant self-delivery, postal parcel is the mode of goods shipped to the other side of the ocean in one of the main ways. The number of packages entering the US under the policy has soared from 139m in 2015 to more than 1.362024 each year, according to Yahoo Finance, citing US Customs and border protection data, 90% of all freight traffic in the United States.
Some businessmen told the global times that the new U. S. policy will indeed have an impact on the cost of goods, and they have begun to deal with it. Mr. Han, who sells camera accessories on the Temu and ships them himself, sent a screenshot of more than 80 orders placed by American users before the Lunar New Year, before he had time to ship them. Mr. Han said that for goods that sell for about $10, for example, the freight, registration fees, customs clearance fees and pre-collected customs duties for his shipments now total more than 80 renminbi, about 40 percent more than before. The change is also being felt by merchants adopting a fully hosted model on platforms such as Temu. In this model, many merchants are factories themselves. They focus on product development and production, and deliver goods as suppliers. Sales, transportation, and distribution are all handled by the platform, this mode of distribution is also usually used to ensure the delivery of direct mail parcel timeliness. The platform requires merchants to control the price of goods as much as possible, but with the implementation of the new tariff policy, the profit margin of fully managed merchants may be challenged.
Profits of companies dependent on Chinese suppliers will be hit
“The wechat group of cross-border e-commerce peers has been very lively in the past two days. Everyone is discussing how to adjust pricing, customs clearance and whether to transform,” Mr. Han said, adding that some foreign counterparts have also said that, the Donald Trump administration’s tariff policy changes have been abrupt and back-and-forth, leaving them bewildered and the agencies struggling to cope. A large number of U. S. retailers and express delivery companies are confused about the new policy, Reuters reported Wednesday. “Right now, we’re all running around like headless chickens, trying to guess what’s going to happen next. In two weeks, we may be back to normal,” said Martin Malmö, founder of Hurricane Commerce, a cross-border e-commerce data provider.
On the 4th local time, the United States Postal Service temporarily suspended receiving parcels from the Chinese mainland and Hong Kong, which was regarded by many American media as a“Chaos” brought about by a sudden policy change. According to U. S. Media reports, policy changes have also led to major U. S. airports parcel customs clearance congestion. Kennedy International Airport alone had a backlog of zero packages as of February 6, according to people familiar with the situation.
If every package had to be inspected, the CNN of international parcels entering the United States would be significantly slowed, CNN reported, citing experts. U. S. Customs officials may be overwhelmed by the sheer volume of inspections.
During the turmoil, some Chinese cross-border logistics service providers have adjusted their fees. According to the fee information sent to the Global Times by business personnel from companies such as yuntu logistics and delivery company Sifang, since the China Standard Time date of February 5, the goods sent to the United States will be charged 20 yuan customs clearance fee and 30% advance customs deposit, the implementation of the“More refund less fill” settlement principle. However, these logistics service providers have issued a new notice, announced the cancellation of these initiatives.
Ms. Xu, an employee of a cross-border e-commerce company in Shanghai, told reporters that the company had shipped a batch of goods to the United States before the Spring Festival, and customs clearance began in the United States on the 5th local time, the declared value of the goods is between $60 and $130. However, US customs duties on some goods are even higher than declared value, “Which strikes us as outrageous, and many of our peers feel that the United States no longer has reliable standards in international trade”
Wang Cao Lei, deputy secretary-general of the China cross-border e-commerce 50-person forum and director of the e-commerce Research Center, told the Global Times on the 8th that for buyers, if the $800 package duty-free policy is removed, not only will cross-border e-commerce be affected, but small order samples for general trade will also be affected. The increase in tariffs directly raises the cost of imported goods and will squeeze margins for cross-border ecommerce companies that rely on overseas suppliers such as China.
Speeding up the layout of overseas warehouses and diversifying overseas
Yang Ming, who runs a toy factory in Chenghai District of Shantou, Guangdong province, China’s“Toy capital”, told the global times on the 8th, many people around in the past two years to expand cross-border e-commerce sales channels. Yang believes that as the United States flip-flops on related policies, some Chinese traders and cross-border e-commerce platforms that simply focus on low prices may need to think more deeply about their operating strategies and their own competitive advantages, some merchants are expected to turn to the recently promoted FBA and semi-custodial models, both of which rely on overseas warehouses and domestic logistics services.
E-commerce logistics industry sources told reporters that Temu has recently launched a new feature, that is, “One-click handling of goods,” the function supports the main store with the full-managed release of goods under a key to semi-managed stores. Since last year, cross-border e-commerce platforms such as aliexpress and Temu have launched a semi-hosting model, which is basically operated by merchants. The platform is only responsible for warehousing and logistics, but merchants have to stock up overseas.
The rise of the semi-custodial model has been matched by a surge in demand for overseas warehouses. “Global Times” reporter learned that recently many overseas U. S. warehouse to receive a substantial increase in the number of inquiries, mainly from cross-border e-commerce practitioners. Recent national policies are also supporting the construction of overseas warehouses. The State Administration of Taxation has recently issued a notice on supporting cross-border e-commerce export warehouses to develop export tax rebates (exemptions) , it was decided to implement a“Tax refund upon departure” for goods exported by taxpayers in the form of cross-border e-commerce export warehouses overseas.
According to statistics from the Ministry of Commerce as of the end of June, Chinese enterprises have built more than 2,500 overseas 2024 with an area of more than 30 million square meters, of which more than 1,800 are dedicated to serving cross-border enterprises, with an area of over 22 million square meters. Some industry insiders said that in the increasingly complex international trade environment of the moment, the role of overseas warehouse or further amplified. Although there is a cost to build overseas warehouses, this model allows companies to achieve a certain degree of balance between“Overseas compliance” and“Commodity cost reduction”, in particular, the first transport of small parcels from air to sea, and then to land transport, logistics costs are expected to save more than 70% , receiving time will be shortened by nearly half.
Another trend in cross-border e-commerce is market diversification. According to data released by the General Administration of customs, China’s total 2024 and exports to the“Belt and Road” countries reached 22.07 trillion yuan, up 6.4 percent year-on-year, for the first time, it accounted for more than 50 percent of China’s total imports and exports. Imports and exports to ASEAN rose by 9 per cent. In addition, the Middle East is also a promising new growth point for the cross-border e-commerce industry. Yang’s company is trying to expand in countries such as Saudi Arabia from the 2023, where internet and smartphone penetration are high and young people like to try new things, he told reporters, the adoption of cross-border e-commerce has also been rapid, “Especially in some oil-producing countries where consumers have considerable economic power.” According to local media reports, the e-commerce market in the Middle East has attracted a large number of cross-border e-commerce platforms such as Amazon, local e-commerce, represented by Noon, is also developing rapidly.
Cao Lei said that while us tariffs on Chinese goods might bring some challenges and difficulties in the short term, they would also promote industry consolidation and upgrading, and accelerate innovation and co-operation in the long term. For cross-border e-commerce sellers, they need to actively respond to challenges and seize opportunities to reduce costs and enhance competitiveness by optimizing the supply chain, improving operational efficiency, and strengthening cooperation and innovation, to achieve sustainable development.