- Sunday, June 15, 2025
After weekend talks in Geneva, both countries have agreed to unwind most of the tariffs imposed on each other’s goods since early April
By: India Weekly
IN A sign of further thaw in United States-China trade relations, the White House has decided to cut the low value “de minimis” tariff on China shipments.
The tariff relief on Monday (12) comes in the wake of Beijing and Washington announcing a truce in their trade spat after weekend talks in Geneva.
Both sides have agreed to unwind most of the tariffs imposed on each other’s goods since early April.
While their joint statement in Geneva didn’t mention the de minimis duties, the White House order released later said the levies will be reduced to 54 per cent from 120 per cent, with a flat fee of $100 to remain, starting from May 14.
The de minimis exemption, for items valued at up to $800 and sent from China via postal services, were previously able to enter the United States duty-free and with minimal inspections.
In February, president Donald Trump ended this exemption by imposing a tax of 120 per cent of the package’s value or a planned flat fee of $200 – set to come into effect by June.
The administration had claimed it was being heavily used by companies such as Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.
The number of shipments entering the US through the tax-free channel exploded in recent years with more than 90 per cent of all packages coming via de minimis.
Of those, about 60 per cent came from China, led by direct-to-consumer retailers such as Temu and Shein.
Chinese online retailers Shein, PDD Holdings-owned Temu and US rival Amazon did not immediately respond to requests for comment.
In Monday’s order, the White House said the reduced tariffs will take effect on May 14, 2025.
The plan for a $200 flat fee duty rate would also be shelved, it said, keeping it at $100.
China exported $240 billion in direct-to-consumer goods benefiting from de minimis worldwide last year, accounting for 7 per cent of its overseas sales and contributing 1.3 per cent of gross domestic product, according to Nomura estimates.
Trump’s global trade war, which shredded the playbooks that have governed international trade for decades, has shaken up financial markets and raised fears of a recession.
The US de minimis rule, which dates back to 1938, has been the target of growing criticism from both Democratic and Republican lawmakers.
Some have derided it as a loophole that allows cheap Chinese products to flood into the United States and undercut American industries, while also serving as cover for smuggling contraband such as illegal drugs and their precursor chemicals.
Tariff pause
The Geneva agreement slashed tariffs for both the United States and China by 115 percentage points each, to 10 per cent and 30 per cent, respectively, for at least 90 days.
The US additional tariff rate remains higher than China’s because it includes a 20 per cent levy over Trump’s complaints about Chinese exports of chemicals used to make fentanyl.
The tariff pause will give online retailers like Shein and Temu breathing space to adapt their businesses, say industry experts, as online retailers are likely to use the time to bring in bulk shipments and restock their US warehouses.
Big beneficiaries of de minimis include online retailers that ship goods mainly from China, such as Shein, Temu and Alibaba’s AliExpress.
Their growth prompted Amazon to start its own discount service, Haul, allowing marketplace merchants to ship $5 accessories and other items directly from China using de minimis.
Separately, China has removed a ban on airlines taking delivery of Boeing planes in the wake of the Geneva trade deal, Bloomberg News reported on Tuesday, citing sources familiar with the matter.
Officials in Beijing have started to tell domestic carriers and government agencies this week that deliveries of aircraft made in the United States can resume, Bloomberg said.
Multilateral order
China threw thinly-veiled swipes at the United States and cast itself as the defender of the multilateral order Tuesday (13) at a summit in Beijing attended by delegates from the Caribbean and Latin America.
Promising billions in development credit and deeper cooperation in everything from energy to infrastructure, president Xi Jinping told the opening ceremony of the China-CELAC Forum that “bullying and hegemony will only lead to self-isolation”.
Beijing has stepped up economic and political cooperation with Latin American nations in recent years.
And Latin America has emerged as a key battleground in Donald Trump’s confrontation with China, and the region is coming under pressure from Washington to choose a side.
Speaking a day after the United States and China announced a deal to drastically reduce tit-for-tat tariffs for 90 days, Xi cast Beijing as a defender of peace and stability.
“There are no winners in tariff wars or trade wars,” Xi said.
“Only through unity and cooperation can countries safeguard global peace and stability and promote worldwide development and prosperity,” he said.
Fentanyl row
China told the United States on Tuesday (13) to “stop smearing and shifting blame” on the causes of its fentanyl crisis, condemning Washington’s “unreasonable” tariffs imposed over the issue.
Beijing reiterated that it is not responsible for the opioid addiction epidemic in the United States.
“Fentanyl is the United States’ issue, it is not China’s issue,” foreign ministry spokesman Lin Jian said.
“The United States has ignored China’s goodwill and imposed unreasonable fentanyl tariffs on China, seriously disturbing cooperation between China and the US in the area of drug control and seriously harming China’s interests,” he said.
“If the US really wants to cooperate with China, it should stop smearing and shifting blame onto China and engage in dialogue in an equal, respectful and mutually beneficial way,” he said.
Washington has long accused Beijing of turning a blind eye to the fentanyl trade, something China denies. (Agencies)
