Why China’s Temu and Shein are Europe’s new commerce risk – DW – 05/06/2025 | EUROtoday

US President Donald Trump’s scrapping of a duty-free loophole has shattered Temu and Shein’s enterprise mannequin, choking their flood of low cost Chinese items into the United States.

In 2024, 1.36 billion shipments entered the US below the so-called de minimis rule, exempting items valued below $800 (€704) from import tariffs. That determine marks a nine-fold enhance from 153 million in 2015.

Goods purchased from Temu and Shein, who dealt with 30% of each day US low-value packages final yr between them, will now be topic to a 30% tariff or flat charges of as much as $50, plus the 145% tariff on imports from China levied by Trump final month.

With costs to US customers greater than doubling, these retailers’ revenue margins are crumbling. So, Temu and Shein will possible double down on Europe, exploiting the European Union’s de minimis loophole to maintain their low-cost mannequin.

Europe plans to scrap de minimis loophole

Though decrease than the US restrict, the EU’s €150 ($170) exemption hasn’t slowed Temu and Shein’s explosive development. In 2024, 4.6 billion low-value parcels flooded the EU market — a doubling from 2023 and tripling from 2022, with 91% coming from China.

Those 12.6 million each day packages are delivered duty-free, undercutting European retailers burdened by greater labor, provide chain and compliance prices. Unlike their Chinese rivals, EU companies additionally do not profit from favorable worldwide postal charges.

Although the European Commission proposed scrapping the EU de minimis exemption two years in the past, the plan nonetheless awaits approval from the 27 EU member states and the European Parliament. The axe is not anticipated to fall till 2027 on the earliest, based on information company Bloomberg.

This delay gives little reduction to these European companies already dealing with fierce Chinese competitors, from e-commerce to photo voltaic panels and electrical automobiles (EVs), who now should face Trump’s US tariffs diverting extra of China’s low-cost EVs and items to Europe.

Many EU retailers concern this might imply Temu and Shein will dump much more low cost merchandise on European markets, placing them out of enterprise.

Chinese items typically fail security exams

Beyond threatening to dampen profitability and elicit layoffs amongst EU companies, this inflow of low cost items raises a lot larger alarms over product security.

Agustin Reyna, director basic at BEUC, a Brussels-based foyer of European shopper organizations, stated teams like his have collected “extensive evidence” of Chinese items — from poisonous make-up and clothes, to defective toys and home equipment — failing EU security requirements.

“We need extra tools to tackle the influx of unsafe products entering Europe via small parcels, often purchased on platforms like Temu,” Reyna advised DW. “Consumers are unknowingly putting their health and safety at risk.”

In January, the European Commission promised strict new controls on Chinese retail platforms to forestall “unsafe, counterfeited or even dangerous” merchandise from getting into Europe. European Trade Commissioner Maros Sefcovic known as on European lawmakers to impose a dealing with charge on Chinese parcels to cowl their hovering compliance prices.

Many policymakers need to maintain on-line platforms immediately answerable for the sale of harmful and faux merchandise. Currently, marketplaces like Temu act as intermediaries, not sellers, evading direct legal responsibility. This creates an enormous headache for customs authorities and regulators.

“With over 12 million parcels entering the [EU] single market every day, it’s simply unrealistic to expect customs to act as the last line of defense,” stated Reyna. “So, it is essential to make online marketplaces accountable for the safety and compliance of the products they sell to European consumers.”

VAT fraud a rising subject

There’s rising proof of different illicit practices by Chinese sellers, together with underdeclaring the worth of the products to keep away from gross sales or value-added taxes (VAT). These vary from 20% to 27%, relying on the EU state.

“There are many cases where importers declare an incorrect value for their consignments to fall below the threshold and avoid customs formalities,” Momchil Antov, an economist and customs knowledgeable on the D. A. Tsenov Academy of Economics in Bulgaria, advised DW. “This is fraud.”

Last month, the EU’s anti-fraud workplace OLAF and Polish authorities uncovered a classy VAT fraud scheme involving Chinese items imported into the EU. Fraudsters claimed the products had been headed for different EU states to keep away from tax and customs duties. In actuality, the items largely stayed in Poland.

In one other instance, from 2023, Chinese exporters used Belgium’s Liege Airport to evade €303 million in taxes utilizing a posh system involving personal customs businesses and faux firms in different EU international locations.

France plans ‘fraud management’ measures

While the European Commission’s plan to scrap the €150 exemption stays held up, some EU states have taken up Sefcovic’s suggestion. France’s authorities stated final week it could step up inspections on low-value items getting into the nation.

The imports might be analyzed for product security, labeling requirements and environmental requirements and Paris will cost a flat-rate “management fee” on every parcel.

European policymakers could have to curb fraud, guarantee compliance and promote honest competitors with out limiting customers’ entry to reasonably priced items from Chinese retailers.

Edited by: Uwe Hessler