Zinger Key Points
- Chinese giants like Alibaba and JD.com brace for impact as U.S. levels the playing field for domestic retailers with tariff changes.
- Trump's new trade tariffs aim to close a loophole benefiting Chinese e-commerce, potentially shaking up online shopping dynamics.
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President Donald Trump‘s new tariffs are set to affect e-commerce, specifically focusing on a tariff exemption for packages valued under $800 that has been in use by Chinese online retailers for a long time.
What Happened: President Trump’s executive orders have put forth a 25% levy on Canada and Mexico, and a 10% duty on China. The “de minimis” exemption, which allowed packages under $800 to enter the US without tariffs, will no longer be applicable.
This exemption had been a significant boon for Chinese e-commerce retailers who could ship inexpensive goods directly to US consumers, reports Bloomberg.
The full impact of these “de minimis” changes remains uncertain. The White House has not provided clarity on whether these changes apply only to the new tariffs or also to existing trade levies.
Trade lawyers have suggested that the language used by Trump could imply a broader application, potentially affecting existing duties against China, Canada and Mexico.
Chinese retailers, including Alibaba, JD.com Inc., PDD Holdings Inc.‘s Temu, and fashion-focused Shein, are likely to feel the most impact from these changes. These companies have been leveraging the “de minimis” loophole to avoid tariffs by shipping individual orders directly to customers from China, reports the outlet.
The new tariffs are scheduled to come into effect at 12:01 am New York time on Tuesday.
Why It Matters: The “de minimis” exemption has long been a point of contention in trade discussions, with critics arguing that it provides an unfair advantage to foreign online retailers. The removal of this exemption will level the playing field for domestic retailers who have been struggling to compete with low-cost goods from overseas.
However, this change could also lead to increased costs for US consumers, who have benefited from the availability of inexpensive goods from Chinese online retailers.
The impact on the e-commerce sector and consumer spending will become clearer once the new tariffs take effect.
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