Beijing Challenges U.S Tariffs Amid Package Chaos
Beijing’s request for U.S. trade consultations came as confusion reigned among shippers and retailers over Trump’s closure of the “de minimis” exemption for package imports valued under $800 and widely used by e-commerce firms including Shein, Temu (PDD.O), opens a new tab and Amazon (AMZN.O), opens new tab.
A Customs and Border Protection official said all small packages from China and Hong Kong needed to have customs entries on file before arrival and there was the potential for some cargo to be sent back without this paperwork.
The WTO said China submitted a request for consultations and opened a new tab with the U.S. on the tariffs. China argues in the document that Trump’s new duties aimed at halting the flow of fentanyl opioids and their precursor chemicals to the U.S. “are imposed based on unfounded and false allegations concerning China.”
It said the duties are discriminatory, only applying to goods of Chinese origin, and are inconsistent with the U.S.’s WTO obligations.
The request for consultations is the start of a dispute process that could lead to a ruling that Trump’s duties violated trade rules in the same manner that a 2020 WTO ruling found that his first-term China tariffs broke trade regulations.
But such a victory would be unlikely to bring Beijing relief because the WTO’s Appellate Body has been largely inoperable for years, as the U.S. has blocked the appointment of appellate judges over what it views as judicial overreach by the body. This has prohibited a final decision in the 2020 case.
PACKAGE CHAOS
The U.S. Postal Service said on Wednesday it would again accept parcels from China and Hong Kong, reversing a temporary suspension that threatened to disrupt millions of package imports every day.
“We’re all running around like headless chickens at this moment in time, trying to second-guess what’s going to happen,” said Martin Palmer, co-founder of Hurricane Commerce, a cross-border e-commerce data provider. “And in two weeks we may be back to normal.”
Trump pauses tariffs on Mexico and Canada, but not China
The Trump administration has blamed the de minimis exemption for allowing fentanyl and its precursor chemicals to enter the U.S. unscreened. Recent Reuters reporting has also found that drug traffickers are exploiting the exemption.
USPS said in a statement it was working with the U.S. Customs and Border Protection agency to implement an efficient collection mechanism for the new China tariffs to minimize disruptions to deliveries.
NO TRUMP-XI TALKS
On Wednesday, there was still no call scheduled between Trump and Chinese President Xi Jinping to discuss the new U.S. tariffs and Beijing’s retaliatory measures, a person familiar with the matter told Reuters.
Trump said on Tuesday he was in no hurry to speak with Xi as the tariff took effect just after midnight Eastern Time.
China responded with targeted tariffs on imports of U.S. coal, liquefied natural gas, crude oil, and farm equipment, and opened an anti-monopoly investigation into Alphabet’s (GOOGL.O), opening new tab Google.
The launch of the new trade war caught the retail and shipping sectors flat-footed.
“There has been absolutely zero time for anyone to prepare for this,” said Maureen Cori, co-founder of New York-based consultancy Supply Chain Compliance.
“What we need is direction from the government on how to handle this without warning or notice.”
Currently, de minimis parcels are consolidated so customs can clear hundreds or thousands of shipments at once, but they will now require individual clearances, significantly increasing the burden for postal services, brokers, and customs agents, Cori said.
The provision was initially intended as a way to streamline trade, and its use has surged with the increase in online shopping.
About 1.36 billion shipments entered the United States using the de minimis provision in 2024, up 36% from 2023, according to U.S. Customs and Border Protection (CBP) data.
TARIFF UNCERTAINTY
U.S. Treasury Secretary Scott Bessent on Wednesday defended Trump’s tariff strategy in his first media interview since taking office, saying it was aimed at bringing manufacturing back to the U.S., including for industries that have largely left U.S. shores.
U.S. Federal Reserve officials on Wednesday pointed to the large policy uncertainty around tariffs and other issues arising from the early days of Trump’s administration as among the top challenges in figuring out where to take U.S. monetary policy in the months ahead.
Chicago Fed President Austan Goolsbee warned that ignoring the potential inflationary impact of tariffs would be a mistake, whereas Richmond Fed President Thomas Barkin said it remains impossible at this early stage to know where cost increases from any tariffs might be absorbed or passed along to consumers.
Mutib Khalid is a skilled content writer and digital marketer with a knack for crafting compelling narratives and optimizing digital strategies. Excel in creating engaging content that drives results and enhances online presence. Passionate about blending creativity with data-driven approaches, Mutib Khalid helps brands connect with their audience and achieve their goals.
