Analysis of the impact of the cancellation of tax-free policies for small packages under $800 in the United States on China’s cross-border trade

Recently, China’s cross-border industry has experienced a shocking change, which is due to the US policy towards China’s cross-border trade. This has made it difficult for the cross-border industry, especially for TEMU, China’s leading cross-border enterprise, TIKTOK, AliExpress, SHEIN, ANKER heard this news and discussed countermeasures one after another。

Significant increase in costs

Tariff overlay cost: A 10% tariff directly leads to a 15% -20% increase in terminal prices of goods, weakening the low price advantage of Chinese goods. Taking Temu platform as an example, a T-shirt originally priced at $5 may rise to $6, affecting the purchasing intention of low-income consumers.
The customs clearance process has become more complicated: after canceling the T86 simplified customs clearance mode, enterprises need to adopt formal entry or informal entry, which increases labor and time costs.
Logistics model forced to transform
The direct shipping model has suffered setbacks: platforms that originally relied on small package direct shipping, such as Temu and SHEIN, are facing dual pressures of extended logistics time and rising costs.
The demand for overseas warehouses has surged: companies are accelerating their layout of domestic warehouses in the United States, such as Orange Union’s plan to build 10 overseas warehouses by 2025, but inventory turnover may decrease by 40%.
Market competitiveness differentiation
The survival pressure on small and medium-sized sellers is intensifying: Morgan Stanley predicts that the new policy may lead to a 30% decrease in China’s exports to the United States, and some small and medium-sized sellers may exit the market.
Accelerating integration of top platforms: Temu, SHEIN and other platforms address challenges by acquiring local brands or adjusting their supply chains (such as building factories in Mexico), but face cultural integration and restrictions on rules of origin

The challenge of policy uncertainty
Although the tax exemption policy has been partially restored, the imposition of tariffs and stricter customs clearance still exist, and further adjustments may be made in the future. The US Congress continues to push for legislative reform, planning to completely exclude sensitive categories such as textiles from tax exemptions. Enterprises need to establish flexible response mechanisms, such as dynamically adjusting inventory and logistics strategies

We need to continue to observe the impact of the next few years on China’s cross-border trade. It is certain that with the intensification of competition between China and the United States, cross-border trade will only become more difficult in the future. We believe that everyone will be prepared to respond。