On Tuesday, new rules implemented by the Biden Administration on small parcels from China went into effect. Previously, these small parcels were not subject to tariffs and import duties under the De Mnimis rule. Late last night, it was reported that USPS had suspended the acceptance of all small parcels from China. This only lasted about twelve hours and was directly related to the changes.
In 1874, the US and China signed a bilateral treaty to deliver mail from each other’s countries. The purpose was to help the railroad industry recruit cheap labor from China. At the time, it was only a relatively small amount of mail. However, by the 2010s, this system began devastatingly affecting the United States Postal Service [USPS] because the number of small parcels from China rose exponentially each year. The USPS was being mandated to deliver small parcels from China for a fraction of what they received to deliver a domestic small parcel.
Imagine you ordered two of the same items on eBay. One was shipped by your next-door neighbor and one by a guy in China. The guy in China pays much less for shipping than your next-door neighbor does. On top of that, when your next-door neighbor purchased the product wholesale from an importer, he already paid to cover the cost of freight shipping from China, tariffs, and import duties. The guy in China pays none of that.
Many of these drop-shipped products are also inferior versions that bypass regulatory bodies, lack safety features, contain toxic ingredients, or violate copyright laws.
This is why eBay, Amazon, and US-based e-commerce websites are now full of people who are just drop-shipping products from China. This is how multiple Chinese drop-ship companies have become massive international businesses. These small parcels, also known as “ePackets,” can be up to 4.4 pounds and can have a combined length, width, and height of up to 36 inches.
In 2019, Trump took action after incoming Chinese small parcels exceeded the one billion mark. Changes by the Trump administration raised the cost of mailing a small parcel from China to the USA. However, it was not enough, and people in China were still paying about half of what Americans were paying to ship the same thing domestically. The number of small parcels continued to rise each year, with USPS now receiving over a billion of these parcels per year.
Each time you mail something within the USA, you subsidize the cost that people in China pay to ship these parcels to the USA. This is a major reason why the cost of postage keeps rising so fast.
Many people believe the end of the De Minimis exemption will dramatically reduce the number of small Chinese parcels sent to the USA. Someone shipping items from China will need to start collecting a lot more information from the customer and do paperwork on the item. However, Trump implemented a blanket 10% tariff on all Chinese imports on Tuesday, the same day the De Minimis exemption ended. This complicates it even further.
USPS could see a massive reduction in the costly burden of delivering over one billion small Chinese parcels.
