The global trade landscape is undergoing a significant transformation. While consumers continue to enjoy the convenience and low prices offered by cross-border e-commerce, a potential policy change from the Group of Seven (G7) nations could dramatically alter the current model—the imposition of tariffs on low-value parcels from China.
G7 Finance Ministers' Proposal: New Tariffs Targeting Chinese Small Parcels
During the G7 finance ministers' meeting held on May 20, 2024, in Banff, Alberta, Canada's Finance Minister François-Philippe Champagne revealed that G7 nations have begun discussions about imposing tariffs on low-value Chinese products. The proposed measures aim to address concerns about oversupply of Chinese goods and coordinate responses to perceived excess capacity and non-market practices.
The De Minimis Rule: History and Current Status
The de minimis value rule, originating from the U.S. Tariff Act of 1930, was designed to simplify customs procedures for low-value goods, reduce administrative costs, and facilitate consumer purchases. This policy has been widely adopted internationally as a key component of global trade. However, with the explosive growth of cross-border e-commerce, the volume of small parcels from China has surged, prompting governments worldwide to reconsider the policy's appropriateness.
Government Rationales: Tax Equity and Domestic Industry Protection
Governments increasingly cite "tax fairness" and "domestic industry protection" as justification for targeting cross-border e-commerce, particularly small parcels from China. They argue that the flood of tax-exempt packages not only results in lost revenue but also creates unfair competition for local businesses. Consequently, calls to modify or eliminate the de minimis rule have grown louder.
Detailed G7 Country Measures
United States: Elimination of T86 Policy
The U.S. took early action by canceling the de minimis exemption for Chinese low-value parcels under the Trump administration, initially imposing tariffs as high as 120% before settling at 54%. Customs data shows that in 2024, approximately 60% of the $39 billion worth of tax-exempt postal parcels entering the U.S. originated from China.
Canada: Considering New Tariffs
Following the U.S. policy change, Canada is actively evaluating tariff measures for Chinese small parcels, which could significantly impact bilateral trade.
France/EU: Fixed Administrative Fees
France plans to implement fixed "management fees" on all tax-exempt small parcels entering Europe starting in 2026, targeting platforms like Shein, Temu, and Alibaba. This transitional measure precedes the EU's planned complete elimination of small parcel exemptions by 2028.
United Kingdom: Reviewing Import Scheme
Britain's Chancellor Rachel Reeves announced a review of the Low Value Consignment Relief scheme, which currently exempts goods valued under £135 from tariffs—a policy supported by domestic retailers who view it as giving Chinese platforms an unfair advantage.
Japan: Potential Tax Reform
Japan is considering modifying its ¥10,000 de minimis threshold, a move widely seen as targeting Chinese e-commerce platforms. The change could subject parcels to standard 10% consumption taxes.
Impact on Cross-Border E-Commerce Sellers
The proposed tariff measures present several challenges for cross-border sellers:
- Increased costs: Tariffs and fees will erode the price advantage of Chinese sellers, particularly affecting budget platforms like Temu.
- Customs bottlenecks: Previously streamlined clearance processes may face delays as customs authorities increase scrutiny of low-value parcels.
- Regulatory complexity: Varying national requirements—from origin documentation to carbon emission reporting—will raise compliance burdens and operational costs.
Strategic Responses for Chinese E-Commerce
Industry analysts view these policy changes as a targeted challenge to China's supply chain efficiency and cost advantages. While creating short-term difficulties, the measures may ultimately push the sector toward value-added competition rather than price-based rivalry.
For Chinese sellers, building intellectual property portfolios has become a strategic imperative in an era of tightening global IP regulations. Diversifying export markets and enhancing product innovation represent additional pathways to maintain competitiveness amid changing trade policies.
Conclusion
The G7's proposed tariffs on Chinese small parcels mark a pivotal moment for global e-commerce. While presenting immediate challenges, these changes may accelerate the Chinese cross-border sector's transition from manufacturing-driven, price-competitive models toward value-added, brand-oriented strategies.