The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc.
According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free.
Tariffs of 10 percent or more and other new costs would slash such shipments, cutting total export growth by 1.3 percentage points and reducing China’s GDP expansion this year by 0.2 percentage point, economists including Ting Lu (陸挺) wrote in a note.
Photo: AFP
The trade in small parcels grew rapidly over the past few years to take advantage of the loophole.
China officially reported about US$23 billion of those exports last year, according to a Bloomberg analysis of government data.
That is almost certainly an undercount, with reports that companies are shipping goods in bulk to Mexico and then breaking them down into small packages to enter the US.
That rise in package trade is one of the factors causing the widening gap between US and Chinese data on bilateral trade, as the Chinese side is counting at least some of the parcels while the US is not.
China since 2020 has reported exporting more to the US than the US reports receiving from China, an abnormal gap that widened last year to US$86 billion.
The new tariff is already causing companies to raise prices, with Chinese logistics firm SF Express (運單追蹤) on Wednesday saying it would impose a 20 yuan (US$2.74) fee on all packages shipped from China or Hong Kong, as well as taking a 30 percent tariff deposit.
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