The US is to cut the low value de minimis tariff on China shipments, a White House executive order said on Monday, further de-escalating a potentially damaging trade war between the world’s two largest economies.
The tariff relief comes in the wake of Beijing and Washington announcing a truce in their trade spat after weekend talks in Geneva, Switzerland, with both sides agreeing to unwind most of the tariffs imposed on each other’s goods since early last month.
The Geneva agreement slashed tariffs for the US and China by 115 percentage points each, to 10 percent and 30 percent respectively, for at least 90 days.
Photo: Reuters
While their joint statement in Geneva did not mention the de minimis duties, the White House order released later said the levies would be reduced to 54 percent from 120 percent, with a flat fee of US$100 to remain, starting from today.
De minimis — a legal term referring to matters of little importance, which describes the US waiver of standard customs procedures and tariffs — was one of the most generous exemptions in the world: For example, the EU de minimis threshold is 150 euros (US$167).
The de minimis exemption, for items valued at up to US$800 and sent from China through postal services, were previously able to enter the US duty free and with minimal inspections.
In February, US President Donald Trump ended the de minimis exemption by imposing a tax of 120 percent of the package’s value or a planned flat fee of US$200 — set to come into effect by next month — blaming it for being heavily used by companies such as Shein (希音), 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 the past few years with more than 90 percent of all packages coming via de minimis. Of those, about 60 percent came from China, led by direct-to-consumer retailers such as Temu and Shein.
In Monday’s order, the White House said the reduced tariffs were to take effect by 12:01am today.
The plan for a US$200 flat fee duty rate would also be shelved, it said, keeping it at US$100.
China exported US$240 billion in direct-to-consumer goods benefiting from de minimis worldwide last year, accounting for 7 percent of its overseas sales and contributing 1.3 percent of GDP, Nomura Holdings Inc’s estimates showed.
Separately, China has removed a ban on airlines taking delivery of Boeing Co planes in the wake of the Geneva trade deal, Bloomberg News reported yesterday, 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 US can resume, Bloomberg said.
While the lifting of the ban clears the way for deliveries to restart, it is unclear how soon China’s carriers can get the planes they need, and the restoration of jet deliveries could be short-lived if the tariff war is not resolved during the three-month reprieve.
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