Transportation changes could help small businesses if it weren’t for a trade war against Trump
Trump this month removed a provision that allows imports of parcels into the U.S. from mainland China or Hong Kong to avoid tariffs and other customs requirements if they are worth less than $800. The loophole has previously faced bipartisan scrutiny from lawmakers and a counterattack from the Biden administration, partly because it enables fentanyl to flow into the United States without organization.
It allows fast fashion giants Shein and Temu, which rely on Chinese suppliers, to gain a large market share by avoiding tariffs on low-value products shipped directly to consumers.
He said the company of Platyx, in Road Toys, was shattered by the rise of these Chinese e-commerce giants. His business in Crofton, Maryland sold road tapes for toy cars – which sound like tapes for a road – all of which were made in bulk in China and shipped to the U.S. containers. His business has flourished, growing double-digit sales growth for several consecutive years. This ended in 2023, when Temu broke out in the U.S. after the company’s high-profile Super Bowl ads.
Sales of Pingteng.com suddenly plummeted. American customers started buying Temu’s counterfeits with route-like tape for $1.50, which is much cheaper than his $9 product. His income fell by 30% in a few months. “No amount of cost cuts will bring me to this price point,” he said. “I made in China, imported my goods, sold them at Amazon to consider all of these fees.” The ending vulnerability (called De Minimis) could boost the competitive environment for goods from China to small consumer brands that say they are being weakened by Temu and Shein’s business models. Musliner said he was encouraged when the Biden administration proposed reforms last year and he was even happier when the Trump administration completely terminated the rule.
But, otherwise small business owners who might have reason to celebrate are now facing difficulties. Any potential benefits of canceling the shipping solution outweigh Trump’s high-priced tariffs on Chinese goods, with little immediate relief. Trump’s tariff rate on China’s imports is at least 145%, and the benchmark rate on dozens of other trading partners is 10%.
“If we have enough privileges to start getting more business because of less competition, we will have to create more people to meet the demand,” Musliner said. “But guess what. That will cost more money, we won’t have.”
Senior Trump administration officials will meet with China in Switzerland this weekend, their first official meeting on trade as Trump imposes tariffs at triple-digit levels last month. On Friday, Trump suggested he was willing to lower the tariffs to 80%, although even that level was too high for many importers, especially small businesses.
Shortly after Trump’s order to close the minimum exemption came into effect in China, Tegua said it had stopped shipping products directly from China to U.S. customers. Instead, all its U.S. orders will be shipped from local U.S. warehouses, indicating a fundamental shift in new taxes on low-value Chinese imports.
Not all small businesses earn from the end of the shipping loophole. Unlike major retailers such as Temu, many people cannot quickly reschedule their supply chains.
John Arensmeyer, CEO of Small Business Majority, is advocating for change, which is part of the more frustration of small businesses that have tariffs on the Trump administration. He added that some business owners who rely on tax exemption exemptions to import small products or components of products they sell in the United States have already provided new taxes for low-value imports.
For businesses that rely on minimums, Trump’s 145% tariff on Chinese goods will amplify the challenge, which now applies to previous duty-free imports.
“Now, suddenly, the impact of losing is lost than last year,” Arensmeyer said.
Small e-commerce vendors selling products in popular online markets bear the brunt of the consequences in the United States and overseas. Cori Kyle, who lives near Vancouver, British Columbia, whose Etsy jewelry business is her main source of income, said she is preparing to stop all sales to U.S. customers. The De Minimis closure may make her items too expensive to buy by Americans; they are now subject to high tariffs as the initial small pieces came from China. Most of her sales may be cut off soon.
Still, policy changes are likely to increase for American moms and retailers who see sales flooded by Shein’s and Temu’s entry into the U.S. market.
For Mike Gray, competition with Chinese e-commerce platforms has been under competition, with the “disassembly” of his e-bike business beginning to emerge about five years ago. Gray owns Sourland Cycles, a bicycle shop in Hopewell, New Jersey, and 20% of his sales come from e-bikes. However, with the popularity of Shein and Temu, customers began shipping to the United States cheaply through De Minimis. His e-bike sales account for about 5% of his overall sales.
“Most of the time,” Gray said. He said many cheap e-bikes experienced brake failures and lacked parts, but the low price still attracted customers to e-commerce sites.
Gray said he hopes the Trump administration’s closure of China’s de Minimis continues. He called the change a “glare hope” that at least it could lower the field slightly.
But for now, Gray is focusing on figuring out how to price bikes as manufacturers start to raise prices through different prices, citing tariff-driven costs. Bicycle maker IBIS charged one of the mountain bikes a 5% tariff or $120 last week, Gray said.
“It’s hard to take it as a point of view and take into account the impact of the De Minimis changes,” he said, “when you have all the uncertainty about the price.” ”
