Impact of US-China Trade Policy Shift

President Donald Trump signed an executive order on February 1st imposing a 10% tariff and removing eligibility for use of the de minimis exemption for all Chinese imports to the US.  Four days later he temporarily reinstated de minimis for Chinese imports to allow US Customs and Border Protection time to develop adequate systems to process the expected sudden spike in formal entry imports. 

With China accounting for around two thirds of the 1.36B de minimis imports into the US last year, the abrupt shift in status of the millions of daily parcels of this type would have quickly overwhelmed customs and led to severe customs congestion and backlogs at US airports.  The pause may also serve as a wind down period for B2C small imports from China during which Chinese e-commerce platforms shift away from their heavy reliance on de minimis and air cargo. These platforms have already been increasing their use of ocean freight to build up inventories in Mexico and the US and there are reports that for American shoppers, Temu is already promoting items from sellers with US-based inventory. 

The savings and speed that the de minimis exemption affords low-value imports …