End of tax-free loophole for low-value goods – Business News
Air cargo cargo quantity from Asia has declined by double digits for the reason that US cancelled a tax-free exemption for low-value packages from China early in May, commerce teams and analysts stated.
Air cargo demand from Asia to North America declined 10.7% in May versus the identical month a 12 months earlier, confirmed information from the International Air Transport Association, illustrating “the dampening effect of shifting US trade policies,” IATA Director General Willie Walsh stated in a report revealed on Monday.
Shipments valued beneath $800 – typically despatched by air to US prospects of low-cost e-commerce platforms equivalent to Shein and PDD’s Temu – fall beneath the so-called de minimis, or too-small-to-matter, tax exemption.
An American flag flies in entrance of transport containers stacked on a container ship (C) on the Port of Los Angeles on June 25, 2025 in Los Angeles, California. Getty Images
Since May 2, nevertheless, such shipments despatched from China and Hong Kong have been taxed at a fee initially as high as 145% earlier than settling to as low as 30% after a mid-May commerce detente between the US and China.
The pair proceed to barter on commerce, with the US stress-free export restrictions on software program, ethane and aerospace to China this week, forward of July 9 when the US plans to re-impose a vary of steep tariffs concentrating on a number of nations.
The quantity of low-value e-commerce shipments from China to the United States in May noticed a notably steep decline, industry consultants stated.
Such shipments fell 43% in May from the earlier month, confirmed estimates from air cargo consultancy Aevean, however rose to different fundamental export markets together with Europe and South-East Asia.
It just isn’t clear whether or not such dramatic declines will proceed, stated Aevean Managing Director Marco Bloemen, given companies had anticipated the de minimis halt and since the tariff fee was lowered mid-month.
A Boeing 737 MAX 8, the second jet supposed for use by a Chinese airline to be returned to its producer, flies mid-air earlier than touchdown at Boeing Field, as commerce tensions escalate over US tariffs with China, in Seattle, Washington, on April 22, 2025. REUTERS
“Will those e-commerce players bounce back to the US now they’re paying 30% duties instead of zero duties?” Bloemen stated. Companies turning to different markets attributable to US commerce coverage uncertainty can also be possible weighing on cargo quantity, he stated.
“That’s a trend that we’re expecting to continue – there’s more Europe-destined e-commerce expected in the month of June, also to markets like Latin America.”
Air cargo consultancy Rotate stated e-commerce platforms have been specializing in different markets to interchange misplaced US demand, with important export growth to the European Union and Asia-Pacific area.
Shein and PDD didn’t instantly reply to Reuters’ requests for remark.
President Donald Trump delivers remarks on tariffs within the Rose Garden on the White House in Washington, D.C, on April 2, 2025. REUTERS
CARGO CUT-BACKS
Low-value e-commerce out of Asia has been taking an growing proportion of world air freight and boosting airways’ cargo companies.
Last 12 months such shipments – at 1.2 million metric tons – made up 55% of goods shipped from China to the US by air in comparison with simply 5% in 2018, Aevean information confirmed.
As Asia-to-US demand fell in May, airways pulled freighter plane off trans-Pacific routes and positioned them elsewhere, industry consultants stated.
A employee carries completed pink Santa Claus hats for export at a manufacturing unit on April 28, 2025 close to Yiwu, Zhejiang Province, China. Getty Images
Some of that demand has now returned as corporations take benefit of tariff pauses between the US and a quantity of nations, however flight frequencies are decreased, they stated.
“Some of the larger players that were chartering three flights a week have cut back to two,” stated e-commerce consultancy Cirrus Global Advisors.
Direct freighter capability between China and the US in June was 11% decrease in comparison with March, wiping out growth in capability over the previous 12 months on these lanes, Rotate information confirmed.
Asia-focused freight forwarder Dimerco Express estimated its e-commerce bookings have been down 50% in May and June. As a consequence, scheduled freighter flights proceed to be cancelled, it stated in a report.
The de minimis rule, which dates to 1938, had been a goal of criticism from American lawmakers as a loophole that lets Chinese merchandise skirt US tariffs and permits unlawful medicine and precursors to make opioid fentanyl to enter the US unscreened.
