The United States tightens its tariff policy on small packages. Is this good news for cross-border sellers?

In recent years, low-price platforms such as Temu have risen rapidly, and with them a large number of small packages have flowed into the market. According to data, in July this year alone, Temu and other platforms transported a total of 1.8 million packages per day in the United States, while at the end of last year, this number was only 1 million.

A report released by relevant US departments pointed out that over the past decade, the number of goods entering the United States using the minimum exemption policy has surged from approximately 140 million pieces per year to more than 1 billion pieces.

In response to this situation, on September 13, the Biden administration announced on the White House official website that it would introduce administrative measures to crack down on "unsafe and fair trade policy-violating" low-value imported e-commerce duty-free packages.

It’s not necessarily a bad thing. Will the advertising costs of cross-border sellers decrease?

According to the previous tariff policies of the United States, small packages with a total value of less than US$800 not only have a more convenient customs clearance process, but also do not need to pay tariffs and taxes, which provides a lot of convenience for low-price platforms including Temu.

In response, Temu said that the company's rapid growth does not rely on the minimum exemption policy. They hope to provide consumers with diversified, reasonably priced high-quality products through an efficient business model, and promised to support legislative adjustments that are beneficial to consumers on the premise of fair policies.

At the most superficial level, the US government's move is mainly aimed at the large number of packages sent to the United States by platforms such as Temu. Industry professionals predict that if the minimum exemption is cancelled, platforms such as Temu will face rising product costs, which will lead them to balance their revenue by raising product prices, which is likely to greatly reduce their low-price advantage.

But if we look deeper, the vast majority of cross-border sellers may also be affected. There is a saying in the industry that after the implementation of the new regulations, the advertising costs of cross-border sellers in channels such as Meta may decline. What is the logic behind this?

According to MediaRadar data, Temu spent $46 million on paid social advertising in the first quarter of 2024, 98% of which was on Facebook. At the time, many cross-border sellers said that Temu's behavior disrupted the market and increased the CPM value.

Some industry insiders speculate that if the new regulations are implemented in the future, platforms such as Temu may have to raise prices to make up for the costs of tariffs, and may also cut their advertising spending in the United States. At that time, the cost of advertising for cross-border sellers on platforms such as Facebook may drop significantly.

"If Temu and other platforms slow down their investment in the United States, advertising platforms like Meta will see some relief, but it is also possible that they will not reduce their investment, and vertical categories such as clothing and household goods will continue to face high advertising costs," said the founder of marketing company DigiShopGirl.

However, although many cross-border sellers hope that the new tariff policy can help free up some advertising space on Meta, its impact remains to be determined.

Temu may get through safely, but will small and medium-sized sellers suffer?

After the news of the new US tariff policy came out, some people believed that advertising costs would decrease, which would benefit sellers, but another voice emerged in the industry.

According to the announcement released this time, the measures that the United States will take mainly include the following aspects:

1. Plan to formulate new regulations to limit the amount of duty-free imported goods and strengthen trade enforcement, that is, exclude products subject to "201 tariffs", "301 tariffs" and "232 tariffs" from the scope of application of the minimum exemption rules.

2. Take other actions to support U.S. textile and apparel manufacturers to counter alleged “unfair competition” from other e-commerce platforms, such as eliminating duty-free status for most textiles and apparel, as well as duty-free status for products subject to anti-dumping or countervailing duty orders.

3. The relevant departments plan to issue a "Notice of Proposed Rulemaking" on the entry of low-value goods, strengthening information collection requirements to improve the regulatory transparency of customs clearance of small-value goods.

4. To prevent small shipments from circumventing safety standards, the Consumer Product Safety Commission (CPSC) staff proposed a final rule requiring consumer product importers to submit an electronic Certificate of Compliance (CoC) to CBP and CPSC when the product enters the country.

Although the US move is seen by the outside world as mainly targeting platforms such as Temu, some analysts believe that the new policy may not only have no effect on these giants, but may also hurt some small and medium-sized sellers.

An international freight forwarding company said that even taking into account tariffs, large platforms such as Temu can still provide sufficiently competitive prices, and Temu is also planning a semi-hosting model to avoid the risks associated with such policy changes, which small and medium-sized sellers obviously do not have.

For these small and medium-sized sellers, the new tariff policy may pose a greater challenge. First, small and medium-sized sellers do not have the resources to quickly adjust the supply chain. In addition, coordinating tariff table codes will also be a major problem. As policies change, sellers will face more customs requirements and related costs, and may need to hire licensed customs brokers when necessary.

" Large platforms like Temu can get lower customs brokerage fees due to their large shipping volumes, but many other small e-commerce companies do not have this treatment , " the freight forwarding company added.

However, cross-border sellers can still circumvent the impact of the new policy through some methods. For example, some companies choose to produce products in Vietnam to circumvent Section 301 tariffs.

Judging from the current situation, it may take several months for the Biden administration’s new proposal to be finalized. Various conditions and changes may occur during this period. It is still unknown what the situation will be like at that time. Yien.com will continue to track the latest developments of this incident.

tariff

Temu

USA