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 beneath the so-called de minimis rule, exempting items valued beneath $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 every day US low-value packages final 12 months 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 shoppers greater than doubling, these retailers’ revenue margins are crumbling. So, Temu and Shein will doubtless 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 progress. 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 every day packages are delivered duty-free, undercutting European retailers burdened by larger labor, provide chain and compliance prices. Unlike their Chinese rivals, EU corporations 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, in line with information company Bloomberg.

This delay provides little aid to these European corporations already going through 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 worry that this might imply Temu and Shein dumping much more low cost merchandise on European markets, placing them out of enterprise.

Chinese items typically fail security exams

Beyond threatening profitability and layoffs amongst EU corporations, this inflow of low cost items raises a lot greater alarms over product security.

Agustin Reyna, director basic at BEUC, a Brussels-based foyer of European client organizations, mentioned 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 instructed 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 payment on Chinese parcels to cowl their hovering compliance prices.

Many policymakers wish to maintain the platforms immediately chargeable for the sale of harmful and pretend merchandise. Currently, platforms 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,” mentioned 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 concern

There’s rising proof of different sharp 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 20-27% 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, instructed DW. “This is fraud.”

Last month, the European Anti-Fraud Office (OLAF) and Polish authorities uncovered a complicated VAT fraud scheme involving Chinese items imported into the EU. Fraudsters claimed the products have been headed for different EU states to keep away from tax and customs duties. In actuality, the items principally stayed in Poland.

In one other instance, from 2023, Chinese exporters used Belgium’s Liege Airport to evade €303 million in taxes utilizing a fancy system involving non-public customs companies and pretend firms in different EU international locations.

France plans ‘fraud management’ measures

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

The imports shall be analysed for product security, labelling 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 shoppers’ entry to reasonably priced items from Chinese retailers.

Edited by: Uwe Hessler