Recently, Washington’s implementation of new tariffs on goods from China may fill a loophole – parcels valued at $800 or less were previously exempt from import tariffs. This policy aims to put Amazon and Chinese emerging e-commerce platform Temu on an equal footing, as the latter enjoyed some unfair advantages under the old tariff system.
The White House stated in a trade policy announcement on January 25th, “After consulting with the U.S. Trade Representative, the Secretaries of Treasury, Commerce, Homeland Security, and the Senior Advisor for Trade and Manufacturing Policy will assess the tariff revenue losses resulting from the implementation of the ‘small exemptions’ on goods at or below $800 under Section 1321 of Title 19 of the United States Code, as well as the risks posed by the import of counterfeit goods and illicit drugs (such as fentanyl).”
The statement also added that the above-mentioned officials “shall propose modifications as needed to protect the United States’ tariff revenue and safeguard public health and safety by preventing illegal imports.”
For years, Amazon has dominated the online retail field with economies of scale. With its sophisticated logistics system and advanced regional warehouse facilities, Amazon has become the preferred platform for online third-party sellers and buyers.
Among the products listed by third-party sellers on Amazon’s website, a considerable portion originates from China. These sellers typically purchase goods over $800 at wholesale prices, which means they have already paid tariffs on Chinese goods. Afterwards, they either absorb these taxes themselves or pass them on to consumers.
In recent years, competition has intensified for Amazon’s third-party sellers as online emerging companies from China, like Temu, began selling large quantities of products to U.S. consumers at prices well below $800 (exempt from import tariffs).
To address this situation, Amazon introduced Amazon Haul – an online store that focuses on low-cost products, with most items priced at $20 or below, and the majority below $10.
Retailboss retail expert Jeanel Alvarado, in an email interview with the Epoch Times, mentioned that Amazon’s Haul strategy is similar to Facebook’s Threads.
“It reminds me of how Mark Zuckerberg rolled out Threads. Threads quickly attracted a large user base in a relatively short time and is now seen as a major competitor to X platform,” she said. “This further cements Facebook’s dominance in the social media network and enhances its ability to meet customer demands.”
While the strategy helped Amazon attract some price-sensitive customers, it does not address the fundamental issue. Under the old tariff system, Amazon’s third-party sellers still remain at a disadvantage, with some sellers forced to exit the market due to disappearing profit margins.
Fanis Matsopoulos, an executive board member of the Athens Chamber of Commerce, stated in an email to the Epoch Times that the $800 tariff exemption, coupled with subsidies from the Chinese government, puts U.S. online retailers like Amazon at a disadvantage in competition, while foreign retailers like Temu benefit from this.
He believes that Trump’s move to address this loophole is not only about balancing the competition between U.S. online retailers and Chinese counterparts, but it also seeks to expand the import tax base to help the president raise funds to expand the tax cut policies implemented during his previous term.
“In this scenario, tariffs can increase revenue and promote a business-friendly environment with lighter tax burdens,” he said.
Former Washington military and diplomatic analyst Yiannis Tsinas praised the decision made by the Trump administration.
However, he believes Washington should take further steps to create an environment that allows online retailers from China and the U.S. to compete on an equal footing. In an email to the Epoch Times, he stated, “The U.S. postal service should stop subsidizing international packages from China.”
Tsinas noted, “Our postal service is subsidizing e-commerce companies from China and Singapore at the expense of American taxpayers.”
He mentioned that this situation stems from a “peculiar system,” the Universal Postal Union, a specialized agency under the United Nations responsible for coordinating international postal policy and services.
“The Postal Union ultimately requires American postal users to pay the difference in costs between the Chinese and American postal services,” he said.
In October 2018, during Trump’s first term, the U.S. announced its intention to withdraw from the Universal Postal Union. However, in September 2019, the 192 member countries of the Postal Union, including the U.S., unanimously reached an agreement to gradually increase shipping rates for small parcels sent from developing countries, especially China, to developed countries starting from July 2020. This agreement led the U.S. to retract its notification of withdrawal from the organization.
The article:
Washington’s New Tariffs Could Level the Playing Field Between Temu and Amazon.