Trump reduces tax on cheap imports from China

Hours after announcing a 90-day mutual reduction in tariff rates with China, the White House has followed up by confirming a similar reduction on duties for cheap imports from the country.

From May 14th, packages from Hong Kong and China valued below $800 will be subject to either a 54 percent tariff — down from 120 percent — or a flat $100 per-parcel fee, which hasn’t changed. Export companies retain the ability to decide whether they want their goods to be taxed at a flat rate or by percentage. Previous plans for a doubling of the flat rate to $200 from June 1st have been scrapped.

The tax on goods below $800 is an effort to counter the effects of the previous “de minimis” exemption, which allowed cheaper parcels to avoid import taxes and duties. Donald Trump first announced plans for a 30 percent rate on de minimis goods, with a $25 flat fee, which was later tripled and then increased again. The latest rates remain substantially higher than those included in his first tariffs package.

Companies like Temu and Shein thrived thanks to the ability to ship goods directly to consumers tax-free, and even the lowered rates will remain a threat to their business models. Both companies recently raised their prices for US consumers in response to elevated tariffs.