In just 3 days, T86 mode (one of the customs and border protection clearance methods in the United States, which means that imported goods worth $800 or less do not need to pay tariffs) has temporarily resumed customs clearance for packages worth $800 or less.
The reason for recovery is that the execution difficulty is too high. The sudden presidential executive order, which cancelled the tax-free treatment for low-cost packages (below $800) in China and its corresponding clearance mode T86 from February 4th, means that customs need to quickly switch from the simplified T86 clearance process to the traditional T1 clearance process. The required inspection procedures and additional information submitted (such as the origin of the goods, product codes, tariff categories, value certificates, etc.) are too complicated, which has caused confusion for logistics practitioners, customs inspectors, postal and express services, and online retailers in both China and the United States.
The volume of cross-border trade is enormous, with over 4 million low value goods entering the country every day (according to data from the US Customs and Border Protection). Over the past decade, the number of packages entering the United States through "small exemptions" has increased nearly tenfold, from 139 million in fiscal year 2015 to over 1.3 billion in 2024.
Based on past experience, the cancellation of the "small tax exemption" policy had already been foreshadowed, but in the face of a huge volume of small tax exempt imported packages from the United States, policy adjustments usually give both parties several months of preparation time. However, the presidential executive order took only 72 hours from signing to taking effect, causing practitioners in the logistics chains of both China and the United States to be unable to respond in a timely manner.
Seemingly a political drama, but with a strong "Trump flavor" - if you want to promote it, first promote it even more.
It is worth noting that the revised executive order states that although tax-free treatment still applies, the treatment of tax-free import of Chinese packages below $800 into the United States will be abolished again when the Secretary of Commerce notifies the President that relevant preparations have been completed.
The arrow is on the string, it's only a matter of time before it's released. The farce of three days before and after sounded the alarm for all overseas practitioners in the first week of the Chinese New Year.
The T86 "De minimas" clause began in the 1930s, when the US Congress set exemptions for small packages to reduce the hassle of American tourists bringing souvenirs home from abroad. In 2016, the US Congress made another adjustment, raising the minimum amount for small tax exemptions from $200 to $800. In the past two years, the rapid development of Temu and SHEIN has opened up a new model for cross-border e-commerce for Chinese enterprises. By 2024, the proportion of Chinese goods entering the United States through "small exemptions" has reached 48%.
In the three days after the government decree was issued, multiple cross-border e-commerce practitioners have been seeking solutions:
Some people believe that 'there are policies at the top and countermeasures at the bottom'. A person in charge of a customs clearance company told Xiaguang Society that for a long time, everyone has been using the "gray space" skillfully, such as when the declared amount of Chinese goods does not match the value of the goods, but the inspection is not strict;
Some people also immediately suspended their deployment in the United States and calmed down to see the reactions of logistics providers and other practitioners before making a judgment;
Some people suggest that the "package within package" approach can be chosen to solve the problem of small batches of goods, which involves consolidating 20-30 small packages into one large package and sending it to a small transit warehouse. But there may be a risk of unclear information about the goods, which does not meet the declaration requirements of the US Customs.
But overall, there are two feasible methods. One is to accept the inevitability of rising logistics costs in the short term and explore other customs clearance methods. Besides T86, other feasible customs clearance modes such as T01 mode and T11 mode are also feasible, but with higher costs and longer time periods.
T01, also known as formal clearance, is the most common customs clearance method with a relatively high overall tariff; T11 stands for Informenter, which is limited to goods under $2500. Each order requires an additional processing fee of at least $2.6, but the delivery time is relatively fast. Overall, after shifting from T86 to T01 and T11, the customs clearance time is expected to increase by an additional 3-5 days on the existing basis. According to Hugo Network, logistics providers have already implemented the T11 model, declaring a total of 1000 shipments of groceries, and all declarations have been successfully released.
Secondly, actively localize the layout and strengthen the localization capacity building of destination countries. Some merchants have suggested that they can choose to change the packaging, transit trade through a third country, and continue to use T86 customs clearance. But the problem is that, in addition to the United States, the European Commission is also calling for the cancellation of tax-free exemption rules for packages under 150 euros, and it is not ruled out that countries such as Japan, South Korea, and Southeast Asia will follow suit and introduce similar policies. If the era of "heavy tariffs" comes, good global resource allocation will become the core competitiveness of overseas enterprises.
From a long-term perspective, 'boots landing' is only a matter of time. In terms of logistics mode, the cancellation of T86 directly affects the transportation forms of dropshipping and direct mail small packages, with less impact on semi custodial and Amazon FBA merchants. Therefore, adopting "sea/air freight+overseas warehousing+distribution" to fulfill the contract, reducing the cost of mainline transportation, and tilting resources towards heavier fully managed overseas warehouses and semi managed warehouses is a better way to face risks.
Recently, the State Administration of Taxation also issued a notice, deciding to implement "tax refund upon departure" for goods exported by taxpayers through cross-border e-commerce overseas warehouses, which will be implemented from January 27th. The policy of "tax refund upon departure" has also promoted the further development of overseas warehouses, providing businesses with breathing space in the face of high tariffs and cash flow issues arising from inventory management.
The Chinese New Year has passed, and although multiple changes have shown the challenges of going global, they are also the source of momentum and the polishing of resilience, promoting the long-term and compliant operation of global brands. In the current era where the competitiveness of Chinese products is no longer just about "low prices", the core competitiveness of the trade war is still the products themselves, and global consumers will also vote for truly good products.
Chinese products and local brands, aimed at global consumers, may be the correct way for businesses to embrace the era of "heavy tariffs".