EXCLUSIVE-EU levies that hit Shein, Temu could add €6 billion to EU budget, document shows

European Union charges on cheap ecommerce packages entering the bloc, which target Chinese platforms such as Shein and Temu, could raise €6 billion a year for the EU budget from 2028 to 2034, a Commission document seen by Reuters on Friday ‌showed.

The estimate, previously unreported, shows the scale of Europe's crackdown on a flood of cheap ecommerce imports, which it says mostly come from China. Some 5.8 billion parcels worth less than €150 entered the EU last year, a 26% rise from the previous year, according to the European Commission, which estimates the majority were undervalued to avoid customs duties.

The EU will impose ‌an additional €2 fee on cheap parcels on November 1, raising the charge per separate item further after a €3 charge has been imposed since the start of ‌July. Temu's owner PDD Holdings said in August that the move would have a "considerable impact" on parts of the business, without quantifying it. Shein makes about a third of its revenue in Europe, and its sales in the region had already fallen before the fees were imposed, as it raised prices and cut ad spending.

The European Commission declined to comment on the revenue estimate. Dirk Gotink, the European Parliament lawmaker leading the bloc's ⁠customs reforms, ​said the new €2 fee was to tackle "a highly ⁠toxic business model of low value non-compliant e-commerce imports from China".

"The newly generated revenue gives us the chance and means to reverse decades of underinvestment and to give Europe's customs authorities the resources they ⁠need to effectively protect our single market," he said. The estimate accounts for an expected decline in the numbers of low-value parcels entering the EU as Brussels expects retailers to adjust to the measures.

FEES ​SQUEEZE CHINESE PLATFORMS The EU fees follow similar moves by the US last year to scrap duty-free treatment of online orders to address concerns over unfair ⁠competition and unsafe products.

The Commission estimates some 90% of the fees collected will go into EU coffers and 10% to member states, but that could change if member states push to keep more of the ⁠proceeds, ​with negotiations over the 2028-2034 budget ongoing. Currently, EU member states keep 25% of the fees. Chinese ecommerce groups have already begun adapting. AliExpress, owned by Chinese ecommerce giant Alibaba, said it was increasing local warehousing in response to the fees, but warned the charges would hurt low-income households in Europe and "exacerbate the cost-of-living crisis".

Temu has been offering ⁠some shoppers a discount on the fees, according to screenshots seen by Reuters, highlighting the pressure to limit sticker shock for consumers used to ordering €3 jewellery and €5 dresses. ⁠Temu did not respond to a request for ⁠comment. Newly listed Shein, which is expanding warehouse space in Poland, said it was focused on keeping prices "competitive" alongside faster and more convenient delivery.

US rival Amazon said 97% of the products it sells in the EU are fulfilled from warehouses in the bloc, ‌so very few shipments are ‌impacted by the fees. ($1 = 0.8971 euros)