China low-value package exemption ends with questions over US tariff collections, logistics

WASHINGTON/LOS ANGELES - The Trump administration ended US duty-free access for low-value shipments from China and Hong Kong on May 2, removing

the “de minimis” exemptions

availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.

The action restores an executive order from President Donald Trump in February that was quickly suspended due to a lack of screening procedures for less than US$800 (S$1,000) shipments that sparked chaos at airports and caused millions of packages to pile up.

US Customs and Border Protection (CBP) has “a massive task at hand” but is ready to handle the enforcement and collection of Mr Trump’s tariffs on small Chinese shipments, a spokesperson for the agency said.

“We are prepared and equipped to carry out enhanced package screening and enforce orders effectively as outlined” in Mr Trump’s executive order ending de minimis treatment for China, the spokesperson added.

The new procedures should not affect passenger wait times at airports and ports of entry, the spokesperson said.

Under CBP’s latest guidance, shipments from China and Hong Kong regardless of size will now be subject to Mr Trump’s

new tariffs of 145 per cent

plus any prior duties, except for products such as smartphones which were excluded in April.

These will largely be handled by express shippers such as FedEx, United Parcel Service (UPS) or DHL, which have their own cargo handling facilities.

Items valued at up to US$800 and sent from China via postal services are treated differently.

They are now subject to a tax of 120 per cent of the package’s value or a flat fee of US$100 per package – an amount that rises to US$200 in June.

Formal entry shift

However, CBP temporarily suspended a rule that would have required formal customs entry for all shipments valued at over US$250 containing goods that are also subject to punitive tariffs.

This would have raised costs significantly for shippers but logistics experts said the suspension will make tariff enforcement harder.

Formal customs entry, normally associated with larger, containerised cargo, requires detailed tariff code information, advance electronic transmission of entry data, recipient tax identification – potentially a social security number – and a bond to cover for customs liability.

And it would have applied to many other countries now subject to US tariffs imposed by Mr Trump, creating a potential new crush of administrative paperwork for shippers.

Under the suspension, the much simpler informal entry procedures can be used for most packages valued at up to US$2,500, including those handled by UPS, FedEx and DHL.

For postal service mail shipments from Hong Kong and China, the formal entry threshold drops to US$800, the previous de minimis level, and are subject to full tariffs.

The lack of detailed information under informal entry, including full tariff codes, will make it “next to impossible” to screen packages for illicit goods such as fentanyl chemicals, said Mr Ram Ben Tzion, the chief executive of Publican, a digital shipping vetting platform.

Mr Trump ended the de minimis exemption for China largely because it was being used for largely unscreened low-value shipments containing fentanyl precursor chemicals into the US, a phenomenon documented in a Reuters series about fentanyl.

Collections at take-off

The US Postal Service said it would not be involved in any duty collections.

Instead, a USPS spokesperson said, airlines and vessel operators would need to work with shippers and the Chinese postal authorities to pay the import taxes and show proof before the goods are transported out of China or Hong Kong.

Shippers were bracing themselves for more package chaos, and some questioned whether airlines were prepared to handle duty collection from China Post and Hongkong Post.

“We have the same worry about bottlenecks,” said Ms Kate Muth, executive director of the International Mailers Advisory Group (IMAG), whose members include Amazon.com, eBay and divisions of UPS, FedEx and DHL.

The end of de minimis and high US tariffs on Chinese goods are likely to dent international air cargo traffic, which had been surging as US shoppers bought more from platforms like Shein and Temu.

Although de minimis is a Latin term referring to matters of little importance, low-value shipments from China to the US reached an estimated US$5.1 billion in 2024, according to US Census Bureau data.

That made it the seventh-largest US import category from China, behind video game consoles, but just ahead of computer monitors.

De minimis packages account for around one-third of the total air cargo tonnes coming to the US from Asia, and that trade volume could drop by 75 per cent in 2025, Trade and Transport Group estimates.

International air cargo traffic growth, which hit 12.3 per cent in 2024, could collapse to between minus 0.1 per cent and plus 0.7 per cent in 2025 as traffic from China to the US stalls and the global economy weakens, said Mr Frederic Horst, managing director of Sydney-based consultancy Trade and Transport Group.

“There’s a lot of cancellations that are happening right now for the next one or two weeks,” Mr Horst said.

Freighter flights are already down about 10 per cent in the week ending May 2, Cirrus Global Advisors founder Derek Lossing said, noting that hefty US tariffs on China likely played a role.

As at the afternoon of May 2, no major disruptions had been reported.

Ultimately, CBP’s enforcement decisions will determine how smoothly the new policies are implemented, Mr Lossing said.

For example, if CBP strictly enforces declared value that could require inspections of more than 10,000 shipments per day.

“It could become chaotic very quickly.” REUTERS