Americans are more likely to pay more for products from popular Chinese e-commerce platforms like Shein and Temu because the U.S. Postal Service said it might stop accepting parcels from China and Hong Kong.
The move was announced Tuesday, coming after the U.S. imposed an extra 10% tariff on Chinese goods and ended a customs exception that allowed small value parcels to enter the U.S. without paying tax. Canada and Mexico managed to barter a month-long reprieve from 25% tariffs threatened by U.S. President Donald Trump.
It is going to likely impact online shopping destinations like Shein and Temu, popular with younger shoppers within the U.S. for reasonable clothing and other products, normally shipped directly from China.
Low cost, direct postal service helps these firms keep costs low, as did the “de minimis” exemption that previously allowed shipments to go tax-free if their value is under $800.
The temporary suspension by USPS is more likely to delay shipments and will mean higher prices in the long run.
What exactly did the USPS announce?
The U.S. Postal Service said in a notice that it might temporarily stop accepting inbound parcels from the China and Hong Kong Posts until further notice.
Letters and flats — mail that measures as much as 15 inches (38 centimeters) long or 3/4 inches (1.9 centimeters) thick — should not affected.
The USPS didn’t state a reason in a transient announcement, however the suspension got here after Trump closed the “de minimis” customs exemption this week that allowed shoppers and importers to avoid duties on packages value below $800.
The exemption was removed as a part of an executive order to levy a ten% tariff on Chinese goods.
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U.S. Customs and Border Protection previously stated that it processes a mean of over 4 million “de minimis” imports each week.
What’s the impact and who’s most affected?
Consumers and firms alike will not find a way to send parcels to the U.S. from Hong Kong or China.
This move is more likely to impact Chinese e-commerce firms like Shein and Temu, although Shein is more likely to be more affected, based on Jacob Cooke, CEO of e-commerce marketing agency WPIC Marketing + Technologies.
Each firms have significant market share within the U.S.
“In comparison with Temu, Shein relies more heavily on USPS for direct-to-consumer shipping from China, and without this channel, it’s going to need to rely more on private carriers,” said Cooke.
“That can increase logistics costs, which together with the recent scrapping of the de minimis exemption for many products from China, could erode its price advantage.”
Cooke said Temu operates on a semi-consignment model and sometimes ships bulk orders to the U.S. before fulfilling orders domestically.
“Temu’s model of sourcing low-cost goods also needs to enable the platform to soak up higher logistics costs and remain price competitive,” he said.
Shein and Temu didn’t immediately comment.
Chinese Foreign Ministry spokesperson Lin Jian said China would take “obligatory measures” to guard its firms, and urged the U.S. to “stop politicizing economic and trade issues and using them as a tool, and to stop unreasonably suppressing Chinese firms.”
What are possible ways for firms to work around the difficulty?
It’s unclear how long the USPS suspension will last, but the hassle to crack down on the de minimis excemption looks as if a longer-term shift in policy, Cooke said.
“Shein and Temu will simply must rely more on private carriers as a workaround to the USPS suspension,” he said.
In the long run, Shein could speed up its warehouse expansion within the U.S., while Temu can double down on its semi-consignment model. By shipping in bulk to the U.S. and fulfilling orders domestically, logistics cost may be reduced, Cooke said.
“Shipping in bulk to the U.S. and fulfilling domestically can reduce logistics costs, but for Shein, this poses a longer-term disruption to their business model which has trusted rapidly developing recent SKUs and shipping them on to consumers,” Cooke said.
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