US tariff hike slashes China’s small parcel exports by 40% in May

A key US trade exemption is gone, and Chinese exporters are paying the price.

Chinese exports of low-value parcels to the United States plunged 40 per cent in May year-on-year, falling to just over $1 billion, the lowest level since early 2023, according to customs data released on Friday by China’s General Administration of Customs, as reported by Bloomberg News.

The sudden drop follows the end of the “de minimis” tariff exemption, a rule that had allowed individual packages under $800 to enter the US duty-free. That policy, long exploited by fast-fashion giants like Shein and e-commerce firm Temu, was scrapped by the Trump administration on May 2 as part of a broader crackdown on Chineseimports.

Trade route disrupted

For years, the de minimis loophole powered a booming, direct-to-consumer trade route between China and the US. It enabled small Chinese merchants and large online platforms to bypass traditional tariffs and ship directly to American doorsteps.

That model has now been upended. New tariffs, which can go as high as 54 per cent, are forcing Chinese exporters to restructure their logistics, raise prices, or abandon the US market altogether.

Exporters feel the pinch

Chinese entrepreneurs say the new rules have squeezed margins and cut off access to the world’s largest consumer market.

Wang Yuhao, who runs incense brand Shantivale from Kunming, told Bloomberg that the new tariffs and shipping fees would cost him $2 per parcel, enough to make his US sales unviable. To adapt, he has had to invest over 100,000 yuan ($13,800) to ship in bulk and store goods in US warehouses.

“It’s a lose-lose situation,” he said. “It means tougher business for us, fewer options for US consumers, and potentially higher prices.

Shein, Temu hit by double-digit decline

Major platforms weren’t spared. According to Bloomberg News, Shein raised prices on US-bound items such as dresses and homeware in the run-up to the tariff hike.

In the first week after the new rules came into effect, both Shein and Temu reportedly suffered double-digit drops in US sales, a sign that cost-sensitive American shoppers may already be turning away.

Even so, the United States remained the largest destination for Chinese small parcels in May, followed by Malaysia, which took in over $700 million worth of such shipments.

Global small parcel exports still rising

Despite the US drop, China’s overall small parcel exports remain robust. In May, global shipments of low-value parcels rose 40 per cent year-on-year, with countries like Belgium, South Korea, Hong Kong, and Hungary emerging as key alternative markets.

But the decline in US-bound packages signals deeper friction in China–US trade, particularly as Trump-era protectionism gains traction in Washington ahead of the 2025 elections.

Strategic recalibration underway

The closure of the de minimis loophole is being seen as part of a broader effort by the US to curb Chinese e-commerce dominance, especially in low-cost consumer goods.

While some Chinese merchants are adapting through bulk warehousing, regional pivots, or platform consolidation, analysts say the policy shift could permanently alter the structure of cross-border e-commerce between the world’s two largesteconomies.

(With inputs from the agencies)