E-commerce Shake-Up: End of U.S. Tariff Exemption Stirs Global Retail Waters

The expiration of a U.S. tariff exemption for small parcels has led several retailers to halt sales to the United States, while others explore temporary solutions. The removal of the 'de minimis' provision exposes Chinese goods to significant tariffs, impacting both prices and trade dynamics globally.

The recent expiration of a U.S. tariff exemption for small parcels is causing significant ripples in the global retail sector. Known as the 'de minimis' rule, this exemption allowed e-commerce packages worth less than $800 from China and Hong Kong to enter the U.S. duty-free. With its removal, a 145% tariff now applies to most Chinese goods, following a decision by U.S. President Donald Trump last month.

Many retailers, like Space NK and Understance, have paused orders to the U.S. to avoid burdening customers with high costs. Meanwhile, companies like Oh Polly and Shein are adjusting their pricing strategies to cope with the new tariffs. Some businesses, faced with untenable costs, are opting to exit the U.S. market altogether, according to Cindy Allen of Trade Force Multiplier.

Major players like Temu are highlighting local stock to evade tariffs, while sellers on platforms like Etsy need to declare product origins more clearly. Despite the challenges, the change could positively impact non-e-commerce U.S. retailers like Primark, who see it as an opportunity to increase in-store traffic due to rising online prices.

(With inputs from agencies.)