On May 20, local time, the European Commission announced that it would make a historic adjustment to the tax policy for imported small parcels: it plans to cancel the duty-free treatment of parcels with a value of less than 150 euros (about 1225 yuan), and levy a fixed fee of 2 euros (about 16.3 yuan) for a single parcel directly mailed to consumers. If the goods are transferred through warehouses in the EU, the cost is reduced to 0.5 euros (about 4.1 yuan).
In general, that isPackages with a value of less than €150 are no longer exempt from customs dutiesand will be charged differently:
- Direct mail parcels are charged 2 euros per piece (about RMB 16.3)
- 0.5 euros/piece (about 4.1 yuan) for parcels sent from warehouses within the EU
EU Trade Commissioner Sevčović said part of the proceeds would be used to pay for additional customs inspections, while the rest would go to the EU budget.And these fees will be borne by the platform to cope with the challenges posed by the influx of cheap goods。
At present, the duty-free preferential treatment of small parcels is an important channel for Chinese cross-border sellers to sell to the EU market.The report also specifically pointed out that the vast majority of small parcels involved in the new regulations come from China.Data shows that in 2024, a total of 4.6 billion such parcels will enter the EU, an average of more than 145 per second, of which 91% will come from China.
This is due to the previous cancellation of the tax exemption for small parcels in the United States, which has made many cross-border sellers turn their attention to Europe in order to "de-beautify", trying to find a breakthrough for growth in the new market environment, including cross-border platforms represented by Temu and Shein. The data shows that both Shein and Temu increased their ad spend in Europe compared to April, with the first 12 days of May up 40% and 30%, respectively
However, just as we are going to make a big deal in Europe, the EU is also going to tax small parcels, which will undoubtedly deal a major blow to the European direct mail small parcel market.Especially for items with an average price of less than 30 euros, profit margins can be completely eaten up。
Will the small packet tax exemption end?
Regrettably, the EU's move is not an isolated case, and a global encirclement of small parcels is unfolding. Suffice it to say, U.S. President Donald Trump earlier this month removed the so-called "small exemption" tax exemption for small parcels worth less than $800 in China, a move that prompted other countries to start looking at similar tax exemptions.
EU countries are also quite positive about removing the tax exemption for small parcels, such as France, which said in April that it wants to start charging non-EU online sellers a per-parcel processing fee by 2028.
Even France wants to collect taxes separately in advance, after French Budget Minister Moncharan made it clear that France plans to charge a fixed handling fee of a few euros per imported small parcel as early as 2026. He also stressed that the fee should be "paid by the importer, the platform, not the consumer". According to the French Ministry of Finance, 800 million small parcels are expected to enter France in 2024.
This month, the Chancellor of the Exchequer announced that it would review the UK's own rules for small tax exemptions. Previously, on April 25, it was announced that it would reassess the tax exemption policy for small parcels worth less than 135 pounds, aiming to solve the problem of unfair competition between international e-commerce platforms such as Temu and local retailers.
Japan, too, is considering a tax on imported small parcels. According to media reports, Japan's Ministry of Finance is considering a review of the tax exemption policy, which includes small parcels.
Some industry analysts said that tariffs, value-added tax and processing fees may increase the cost of low-priced goods by 10%-30%, weakening the price competitiveness of Chinese products.
For example, when the United States imposed high tariffs before, platforms such as SHEIN and Temu have increased the price of products to varying degrees. Since the price increase on April 25, the sales and traffic of SHEIN and Temu in the US market have shown a downward trend. Similarweb data shows that as of May 9, the average daily customer traffic on the platform was down more than 20% from the 15 days before the adjustment.
This is true for the U.S. market, and Europe is no exception after taxes.
Localization is inevitable
"I don't know where else to go", the frequent tariff reversals represented by the United States have made the cross-border e-commerce industry turbulent, and also made many cross-border sellers discouraged, especially direct mail packets.
If even the duty-free threshold in Europe is removed, the cost of cross-border sellers will inevitably rise significantly. Some industry insiders said that if the cost of a commodity increases by 2 euros, there is almost no possibility of profitability for products below 30 euros.
The European e-commerce market has a high threshold, and the market is fragmented and has many compliance requirements, which requires sellers to spend a lot of resources and energy to maneuver between different platforms and markets, and it is difficult to quickly open the situation.
As a result, the operating costs of cross-border sellers in the European market are already very high, with fees such as VAT, compliance service fees and platform commissions exceeding 50%. If you add a 2 euro tariff, many sellers will face a survival dilemma. The EU's Directorate-General for Markets predicts that the tax on non-EU small parcels could increase by €2.4 billion in annual tax revenue, but could lead to 30% of e-commerce sellers exiting the market.
In this context, localized layout may become an inevitable choice for cross-border sellers. In order to reduce the logistics cost of a single piece, it will be more feasible to adopt the mode of "small package consolidation and pre-warehouse stocking".
The European edition of Politico News also added in the news that the differential charges are also intended to encourage platforms such as Temu and Shein to send goods in bulk and then distribute them from warehouses within the EU.
For example, it is actively recruiting local European merchants, establishing a local fulfillment system, and developing a "local-to-local" business model, that is, local merchants deliver goods from local to consumers for fulfillment. Temu expects 80% of its total European sales to come from this model in the future.
epilogue
From the US "$800 threshold" to the EU's "€150 defense", we have noticed that developed countries are reconstructing the trade order through tariff barriers. Behind this change, it is not only the practical need to protect the local industry, but also the epitome of the deep adjustment of the global industrial chain.
For Chinese cross-border sellers, the era of relying on policy dividends to "lie down" in the past has come to an end, and only by actively adapting to the rules and accelerating the localization layout can they hold their positions in the wave of anti-globalization.
As one seller said: "When the whole world is building walls, we must not only learn to climb over the walls, but also know where to take root." "In this offensive and defensive battle around small parcels, the sellers in the cracks can only actively look for a way out, short-term pain is inevitable, but it is also time to rewrite the logic of global e-commerce competition.
