In a surprising development, President Donald Trump has suspended tariffs on small packages shipped from China. This decision follows his abrupt order that ended the duty-free treatment for shipments valued at less than $800, which caused significant confusion among the US Postal Service and other agencies tasked with managing imports.
Initially, the Postal Service halted the acceptance of packages from China in response to the new directive. However, this decision was quickly reversed just one day later. This rapid change left many consumers in the US anxious about the status of their orders from popular retailers such as Shein and Temu, which had relied on the exemption for low-value packages to grow their market presence in the country.
Details of the tariff changes
Trump’s decision to revoke the original order was made over the weekend as part of a broader initiative to increase border taxes on imported goods from China by 10% effective February 4. The revision announced on Friday clarified that the tariff-free treatment for packages valued under $800 would be maintained until “adequate systems are in place to fully and expediently process and collect tariff revenue.” This change comes amidst a flurry of rapid policy shifts from the Trump administration, many of which have faced unforeseen complications, including legal challenges.
Broader implications and future tariffs
Last weekend, Trump indicated he was implementing a 25% tariff on goods imported from Mexico and Canada, only to suspend those duties for a month to allow for ongoing negotiations. Additionally, he announced plans to unveil “reciprocal tariffs” on various countries the following week, a strategy initially highlighted during his campaign, where the US would impose tariffs that match those of other nations on comparable American products.
Prior to Trump’s administration, the US began reconsidering the de minimis exemption for low-value packages. In September, the Biden administration proposed stricter regulations on these imports from China, arguing that such measures would enhance competitiveness for US companies and address issues related to illicit drug shipments. The threshold for tariff exemption was raised from $200 to $800 in 2016 to streamline trade processes and allow officials to focus on more critical shipments. However, this policy has come under scrutiny as the e-commerce sector has flourished, leading to a dramatic increase in the number of packages entering the US under this limit, escalating from 140 million to over 1.3 billion last year.