$800 exemption ends—Chinese sellers gear up for what's next

by Cheng Lu

Chinese cross-border e-commerce firms scrambled to adjust after former US president Donald Trump announced sweeping new import tariffs and the end of a longstanding duty exemption for low-value goods from China and Hong Kong.

Under a new executive order signed on April 2 and effective immediately, the US imposed additional tariffs on imports from more than 60 major economies, with China facing a 34 per cent surcharge on top of the existing 20 per cent tariff rate—raising the effective duty on Chinese goods to 54 per cent.

The same order also eliminated the long-standing US$800 de minimis threshold for shipments from mainland China and Hong Kong. Starting May 2, Chinese parcels under US$800 will be subject to either a 30 per cent tariff or a fixed fee of US$25 per package, rising to US$50 from June 1.

The move marked the end of a golden era for Chinese platforms like Temu and Shein, which built massive US businesses by shipping low-cost goods directly to consumers using the duty-free loophole.

“The scale of the tariff hike surprised many—most of us expected an increase of around 20 per cent,” said Luo Chang, chairman of Shenzhen-based electronics manufacturer Soten Technology. “The US is still the largest consumer market globally, so this will inevitably force companies to rethink their strategies.”

While the tariff hike may cool short-term sales—following a Q1 surge driven by pre-policy stockpiling—exporters have already begun to pivot.

From de minimis to distributed warehouses

The US$800 duty-free threshold originated from Section 321 of the 1930 Tariff Act and was expanded under the Obama administration in 2016 to reduce processing burdens for low-value imports. It became a springboard for Chinese platforms offering low-cost goods via direct shipping.

But as the new policy shuttered this pathway, platforms fast-tracked a transition to local fulfilment. Temu and Shein, for instance, scaled up their use of overseas warehouses to maintain delivery speed and competitiveness.

Temu shifted key products to a “semi-managed” logistics model in March, requiring merchants to stock inventory locally. Shein, which launched a similar program in June 2024, now operates three major fulfilment centres in the US.

The platforms also encouraged local merchant partnerships and prepared for global market expansion, especially in Europe, Latin America, and Southeast Asia—regions that have shown robust demand and may be less impacted by US policies.

“The de minimis rollback was always a matter of when, not if,” said a person close to Temu operations. “Now it’s about adjusting the model before the change fully bites.”

Turning point from cost to value

Beyond logistics, the tariff shift could accelerate a deeper transformation—from a race-to-the-bottom price war to a focus on value creation and brand differentiation.

Logistics firms had already notified clients of price hikes tied to revised customs clearance rules, and higher fulfilment costs are expected to be shared between companies and consumers. As Chinese sellers lose their cost edge, many are rethinking product strategies.

“While tariffs do impact us, our products have no real substitutes and are still cheaper than US-made alternatives,” said Du Chuankui, head of Jiangsu-based health tech company Xintang. “We’ll invest more in R&D to create technical value and optimise local operations.”

For some, the disruption presents a chance to pivot to higher-margin, B2B channels.

“Once the loophole is closed, low-cost parcel shipping will shrink dramatically,” Luo said. “But this could benefit B2B exporters who rely on centralized procurement in China and localised distribution in the US.”

No refuge in Southeast Asia

Some Chinese manufacturers had moved production to Southeast Asia to sidestep origin-based tariffs. But the Trump tariffs now cover countries like Cambodia (49%), Laos (48%), and Vietnam (46%), rendering such detours ineffective.

China, despite the higher duties, may retain an advantage in supply chain maturity and scale.

On April 3, Chinese foreign ministry spokesman Guo Jiakun criticised Washington's unilateral tariff hikes, calling them a violation of WTO rules and a threat to the multilateral trade system. He warned that Beijing would take necessary steps to safeguard its interests and reiterated that trade and tariff wars benefit no one.