The White House has cut tariffs on low-value “de minimis” parcels shipped directly from mainland China and Hong Kong to the US, hours after the two countries announced a 90-day suspension of the high punitive tariffs they had levied on one another.

Parcels with a retail value of under $800 (£600) will now face a tariff of 54 percent, down from 120 percent, the White House said, marking a further de-escalation of the countries’ trade war.

Each parcel will be charged a flat fee of $100, as previously announced, but the figure won’t rise to $200 as had been planned.

Lower duties

Companies such as Temu and Shein had used the de minimis exemption to build massive businesses selling low-cost products shipped to users around the world directly from China.

The provision was suspended indefinitely in February as part of a presidential executive order, meaning low-value parcels from China now face normal import taxes and customs inspections.

The order also imposed a 120 percent tariff on the value of the items.

The move created chaos as the US Postal Service temporarily stopped accepting parcels from China before resuming service.

Some 1.36 billion parcels using the de minimis exemption to enter the US in fiscal 2024, up from 637 million four years earlier, according to US customs data.

The popularity of Temu and Shein caused Amazon to launch a similar service called Haul that also features low-cost products from China.

Business-model shift

Temu and Shein have adapted their business models to the loss of the de minimis exemption, with Temu saying on 2 May that all sales in the US are now handled by locally based sellers.

An earlier report by Reuters said Shein and Temu were planning to use the 90-day pause in China-US tariffs to restock their US warehouses via bulk transfers in container ships.

Under the 90-day suspension, the US is to lower punitive tariffs on China from 145 percent to 30 percent, while China will drop US tariffs from 125 percent to 10 percent.