Americans are likely to pay more for products from popular Chinese e-commerce platforms like Shein and Temu as the U.S. Postal Service said it would stop accepting parcels from China and Hong Kong.
The move was announced Tuesday, coming after the U.S. imposed an additional 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 negotiate a month-long reprieve from 25% tariffs threatened by U.S. President Donald Trump.
It will likely impact online shopping destinations like Shein and Temu, popular with younger shoppers in the U.S. for cheap clothing and other products, usually shipped directly from China.
Cheap, direct postal service helps these companies 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 likely to delay shipments and could mean higher prices in the long term.
What exactly did the USPS announce?
The U.S. Postal Service said in a notice that it would temporarily stop accepting inbound parcels from the China and Hong Kong Posts until further notice.
Letters and flats — mail that measures up to 15 inches (38 centimeters) long or 3/4 inches (1.9 centimeters) thick — are not affected.
Why did it happen?
The USPS did not state a reason in a brief announcement, but the suspension came after Trump closed the “de minimis” customs exemption this week that allowed shoppers and importers to avoid duties on packages worth below $800.
The exemption was removed as part of an executive order to levy a 10% tariff on Chinese goods.
U.S. Customs and Border Protection previously stated that it processes an average of over four million “de minimis” imports each week.
What is the impact and who is most affected?
Consumers and companies alike will no longer be able to send parcels to the U.S. from Hong Kong or China.
This move is likely to impact Chinese e-commerce firms like Shein and Temu, although Shein is likely to be more affected, according to Jacob Cooke, CEO of e-commerce marketing agency WPIC Marketing + Technologies.
Both companies have significant market share in the U.S.
“Compared to Temu, Shein relies more heavily on USPS for direct-to-consumer shipping from China, and without this channel, it will have to rely more on private carriers,” said Cooke.
“That will increase logistics costs, which along with the recent scrapping of the de minimis exemption for most products from China, could erode its price advantage.”
Cooke said Temu operates on a semi-consignment model and often ships bulk orders to the U.S. before fulfilling orders domestically.
“Temu’s model of sourcing low-cost goods should also enable the platform to absorb higher logistics costs and remain price competitive,” he said.
Shein and Temu did not immediately comment.
Chinese Foreign Ministry spokesperson Lin Jian said China would take “necessary measures” to protect its companies, and urged the U.S. to “stop politicizing economic and trade issues and using them as a tool, and to stop unreasonably suppressing Chinese companies.”
What are possible ways for companies to work around the issue?
It is unclear how long the USPS suspension will last, but the effort to crack down on the de minimis excemption seems like a longer-term shift in policy, Cooke said.
“Shein and Temu will simply need to rely more on private carriers as a workaround to the USPS suspension,” he said.
In the long term, Shein could accelerate its warehouse expansion in 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 can 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 depended on rapidly developing new SKUs and shipping them directly to consumers,” Cooke said.
—Zen Soo, AP Business Writer