It’s a landmark action by postal services worldwide. Because of new tariff regulations introduced by the Trump administration, they have suspended deliveries to the United States. The recent shifts to regulations impacting packages coming from China and Hong Kong have caused a lot of alarm. Of course, both consumers and businesses should be concerned about the predatory implications. The new hometown rules are aimed at areas named by the White House. These regions account for nearly all de minimis shipments that come into the US.
In May 2024, former President Donald Trump announced the suspension of the de minimis exemption for packages valued under $800 from China and Hong Kong. This exemption had in recent years permitted a substantial amount of low-value packages to be imported into the country tariff-free. By July of 2024, the administration made it official and announced that it would no longer offer this critical treatment. This removal was a significant turning point in US trade policy.
Impact of the New Regulations
In 2024, an exemption known as the de minimis was responsible for allowing approximately 1.36 billion packages to enter the US. These products were worth a staggering $64.6 billion. This wave made up a large share of the online buying done by American consumers, especially those buying through China-based merchants. Removing this exemption will sharply boost the price of postage, putting a lot of popular goods out of reach for consumers.
Packages coming from countries under tariff will now have additional fees based on their corresponding tariff rates. This move is sure to dissuade consumers from making purchases from foreign-based retailers. In other words, we should expect to see a drop in total online shopping penetration. Additionally, industry experts argue that consumers will end up paying more. Businesses will almost certainly pass on the costs of these new fees.
The damaging rollbacks during the Trump administration have certainly raised the alarm from businesses and industry associations across the country. Most of these advocacy organizations have even pushed for closing what they considered a “de minimis loophole” for decades. They argue the new rules would level the playing field between domestic retailers. For too long, these retailers have fought an uphill battle against foreign sellers who benefit from favorable shipping terms.
Adjustments by Postal Services
In reaction to the postal changes, postal providers from several countries have placed emergency suspensions on shipping to the US. They’re feeling their way into compliance with the new regulations. This suspension creates a vital window for correction to occur before life returns to business as usual. The industry is already hard at work trying to figure out how to put the new tariff-related fees to use. These charges in customs vary based on the country of origin.
In response, US customs has implemented a temporary alternative fixed fee system. This move is a smart step to lessen some of that acute pressure on consumers and businesses. This provision will remain active through the end of February 2025. Part of their intent is to offer a temporary, stopgap measure while services like the Postal Service grow and change. This temporary tariff has a lot of variation based on the originating country’s tariff rate.
These losses have already resulted in significant impacts on consumer choice and behavior. Latest data shows a 90% decrease in US users on the China-based shopping site Temu. In May, the number of users dropped by almost 50% compared to March, a decrease clearly tied to tariff increases and the suspension of shipping.
Looking Ahead
As postal services around the world adjust to these new regulations and consumers reassess their shopping habits, the long-term implications remain uncertain. Together, the postage cost increases and tariff fees could upend the international e-commerce playing field.
Moreover, with growing concerns about inflation and rising consumer prices, the impact of these changes may extend beyond just online shopping. Unsurprisingly, economists are watching intently to see how these changes will condition markets at home and our trade partners abroad.