Trump tariffs hit China hard, 40% drop in small parcel Chinese shipments to US

Chinese exporters are paying the price of the sweeping tariffs introduced by US President Donald Trump. The brunt of the Trump tariffs is significant to the Chinese economy, especially in the parcel industry. According to China’s latest customs data, released on Friday, China’s exports of low-value parcels to the United States dropped 40 per cent in May year.

The data was released by China’s General Administration of Customs, ringing alarm bells in Beijing, Bloomberg reported. China’s export of small parcels to the US now stands at just over $1 billion, which is the lowest since early 2023. The 40 per cent plunge from the same month last year marked a sharp reversal of the booming trade between the two nations.

The Trump tariffs are also affecting the business models of fast-fashion titan Shein and its rival Temu, which relied on the exemption to send goods directly to US customers free of tariffs. Apart from this, the tariffs are squeezing thousands of small merchants who relied on the model as a low-cost entry into the world’s largest consumer market.

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“Without the exemption, it would mean tougher business to us, and much fewer options for consumers, and potentially higher prices,” said Wang Yuhao, whose Kunming-based incense company, Shantivale, recently began selling to the US told Bloomberg. “This is a lose-lose situation," he added.

The demise of the loophole

For entrepreneurs, the new tariffs and logistical fees of direct shipping now would mean losing $2 on every parcel. Wang noted that to avoid additional costs, Chinese businesses have moved to bulk shipping to US warehouses. However, even that would require an upfront investment of more than 100,000 yuan ($13,800) for inventory and storage.

The reason behind the disruption the parcel industry is facing is the demise of the “de minimis” rule exemption for Chinese and Hong Kong shipments. Before the Trump tariffs, packages valued under $800 could enter the US duty-free.

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However, since May 2, even those parcels are facing tariffs as high as 54 per cent. The Trump administration said that the measure was taken to get rid of the unfair loophole that the Chinese companies enjoyed. According to Bloomberg, in the week after the tariffs took effect, both Shein and Temu saw a double-digit sales drop, an early sign the punitive measures were eroding their popularity.

However, despite the drop, the US remains the largest single destination for China’s small parcels, as per the data released by the Chinese authorities. Malaysia followed by taking more than USD 700 million worth of such shipments last month. Meanwhile, China’s small parcel shipments to the world rose 40 per cent in May compared to a year ago, with Belgium, South Korea, Hong Kong and Hungary among other large players.

With inputs from agencies.