WASHINGTON (AP) — President Donald Trump has paused imposing tariffs on small-value packages arriving from China, apparently to give federal agencies time to sort out how to process millions of such shipments that have come through the U.S. border every day without paying taxes. The executive order, dated Wednesday, didn’t specify when the pause would end but stated it would cease when the Department of Commerce could put in place “adequate systems” to “fully and expediently process and collect tariff revenue.” John Lash, group vice president of product strategy at the supply chain platform e2open, noted that the order affected a large number of small packages, many of which are in transit. “The volumes are absolutely incredible,” Lash said. “And all of a sudden, they go from not requiring filing (for tariffs) … to actually requiring full filing, which is a complicated task.” Ending tariff exemptions on low-cost packages from China has broad bipartisan support in Washington. Trump raised tariffs on Chinese goods by 10% earlier this week, making goods sent through duty-free packages subject to existing tariffs (25% for many Chinese products) and the new 10%. This marks another pause on Trump’s policies weeks into his second administration, including orders to impose tariffs on Mexico and Canada, which were suspended after the two allies took steps to address his concerns about border security and drug trafficking. The U.S. Postal Service, which would be responsible for collecting tariffs on small packages, initially announced it would not accept parcels from mainland China and Hong Kong, only to reverse the decision the next day. It said it would work with Customs and Border Protection to implement a collection process for the new tariffs. The so-called de minimis exception, introduced in 1938, was intended to facilitate the flow of small packages valued at no more than $5, the equivalent of about $106 today. The threshold increased to $200 in 1994 and $800 in 2016. However, the rapid rise of cross-border e-commerce, driven by China, has challenged the intent of the decades-old customs exception rule. Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a report released last week by the Congressional Research Service. In 2023, for the first time, more than 1 billion such packages came through U.S. customs, up from 134 million in 2015. By the end of last year, Customs and Border Protection was processing about 4 million small shipments a day, many of which came from China through online retail platforms such as Shein and Temu. Critics argue that the practice has allowed not only tariff evasion but also the flow of unsafe products such as counterfeits and illicit drugs into the U.S. Supporters, however, argue that it helps keep prices affordable for U.S. consumers and small businesses. After Trump threw out the exemption, some analysts noted that the policy shift could lead to higher prices and delivery delays as U.S. customs officials cope with an onslaught of packages to scrutinize. Neil Saunders, a managing director with research firm GlobalData, said, “We are talking about millions of packages every week that currently just basically get treated like domestic shipping.” Lash said the end to the de minimis exception rule would change the cross-border e-commerce model when tariffs and filing paperwork drive up costs, prompting overseas sellers to turn to bulk shipping. — news from The Associated Press
