HONG KONG, May 14 — The United States will cut the “de minimis” tariff for low-value shipments from China to as low as 30 per cent, according to a White House executive order and industry experts, in a move that may ease tensions in a potentially damaging trade war between the world’s two largest economies.

The order published late on Monday offers some relief to major Chinese e-commerce players Shein and Temu and follows a weekend agreement between Beijing and Washington to suspend for 90 days most of the tit-for-tat tariffs imposed on each other’s goods since early April.

Although the joint statement after talks in Geneva did not mention the de minimis duties, the order signed by President Donald Trump said levies for those direct-to-consumer postal shipments will be reduced to 54 per cent from 120 per cent for items valued up to US$800, starting Wednesday.

An alternative flat fee of US$100 per postal package remains in effect, but a planned 1 June increase to US$200 was cancelled.

Different rules apply to packages handled by commercial delivery firms such as United Parcel Service, FedEx and DHL, which had shipped millions of Shein and Temu packages before Trump ended duty-free status for Chinese shipments below the US$800 threshold.

The rate for those packages now defaults to a reduced US tariff of 30 per cent, down from 145 per cent, for Chinese imports, according to two delivery experts who spoke to Reuters on condition of anonymity due to fear of retaliation.

The 30 per cent rate reflects the Trump administration’s decision to reduce China’s “reciprocal” duty to 10 per cent from 145 per cent, plus an additional 20 per cent duty linked to the US fentanyl crisis.

The White House and the US Trade Representative’s office did not immediately respond to requests for clarification.

Trade Representative Jamieson Greer told CNBC on Tuesday that the 10 per cent global duty rate is likely to remain in place to support efforts to rebuild US manufacturing.

Collection difficulties

Commercial shippers usually collect duties from sellers in China before dispatch, but the US Postal Service lacks the capacity to process tariff collections.

Four sources told Reuters that most Temu and Shein shipments are handled by commercial carriers.

Many Chinese consumer goods sent via commercial channels remain subject to much higher tariffs imposed under earlier trade actions or national security probes.

For instance, syringes and surgical gloves face 100 per cent tariffs under a US Section 301 trade action.

One delivery expert said that if sent by postal carrier and valued under US$800, such items could still enter the US for a US$100 fee — an effective rate of 12.5 per cent.

In February, Trump ended the de minimis exemption and introduced different rules for packages handled by postal services and commercial carriers — blaming the exemption for a surge in shipments from Chinese online retailers and an influx of fentanyl and other illicit goods.

The volume of shipments entering the US through the tax-free channel surged in recent years, with over 90 per cent of all packages using the de minimis route.

Of those, about 60 per cent came from China, led by direct-to-consumer retailers such as Temu and Shein.

According to 2024 congressional testimony from a US Customs and Border Protection official, the average value of a de minimis shipment in the 2023 fiscal year was just US$54.

Chinese online retailers Shein — which is reportedly considering a London stock market listing — and Temu, owned by PDD Holdings, as well as US rival Amazon, did not immediately respond to requests for comment.

China exported US$240 billion in de minimis-eligible direct-to-consumer goods globally last year, representing 7 per cent of its total exports and contributing 1.3 per cent to GDP, according to Nomura estimates.

Jianlong Hu, CEO of Chinese cross-border e-commerce consultancy Brands Factory, said a 54 per cent tariff remains “very high”.

“Sellers are probably taking a wait-and-see approach, but in general I think it’s fair to say the boom times of small package delivery from China to the US — the Golden Age — is already gone.”

Shein is more exposed to de minimis policy changes due to its model of rapidly air-shipping thousands of new fashion items each week to Western consumers.

Hu said Shein may still opt to send some packages by air and pay the 54 per cent tariff, rather than switch entirely to slower sea freight.

“If people are buying clothes on Shein and are told the product will arrive one month later, who will buy that?”

Loophole

China’s yuan rose to a six-month high against the dollar on Tuesday, joining a global rally in riskier assets following the broader trade deal between Beijing and Washington.

Trump’s global trade war has disrupted international trade norms, rattled markets and raised concerns of a recession.

The US de minimis rule, which dates back to 1938, has come under fire from both Democratic and Republican lawmakers as a loophole allowing Chinese goods to bypass tariffs and illegal drugs, including fentanyl precursors, to enter the US uninspected, as Reuters reporting has confirmed. — Reuters