US Trade War Targets Global Consumers

New Tariffs on Low-Value Goods Could Disrupt Retail and Investment Trends

A Major Shift in US Trade Policy

In a significant move that could impact businesses and consumers worldwide, US President Donald Trump has dismantled a long-standing import exemption for low-value goods entering the United States. The end of the "de minimis" rule represents a new front in the ongoing global trade war and could have serious implications for cross-border e-commerce, supply chains, and even stock markets.

What Was the De Minimis Rule?

The de minimis exemption allowed consumers and businesses to send goods valued under $800 (£595) into the US without paying import duties.
This threshold has been in place since 2016, and at lower levels for decades prior. However:

• In May, Chinese e-commerce platforms like Shein and Temu were the first to lose this benefit.
• As of now, the exemption has been revoked for all countries.
• Only personal gifts and letters under $100 (£74) will remain duty-free.

Why Has Trump Made This Change?

This shift isn’t purely about protecting American businesses. According to the Trump administration, there are multiple motivations:

• Revenue Generation: More tariffs mean more funds collected for government use.
• Combatting Fraud: The administration cited deceptive shipping practices and tariff circumvention.
• Drug Control: Allegedly, some parcels marked as low-value have been used to smuggle illegal substances like fentanyl.

Global Reactions and Confusion

The global postal system is already feeling the strain:

• Countries like Japan, Germany, and Australia have suspended shipments to the US until the changes are clarified.
• Shipping firms including DHL and FedEx are working on new protocols.
• Royal Mail has introduced a new “postal delivery duties paid” (PDDP) service for UK consumers and Post Office users.

UK-Specific Impact

While the UK escaped higher retaliatory tariffs due to a previous "trade deal", it’s not entirely off the hook:

• Goods over the £74 limit are now subject to a 10% tariff when entering the US.
• Businesses will face handling fees and duties based on manufacturing origin.
• The government is under pressure to drop the UK’s own £135 de minimis threshold, with a review already announced by the Chancellor.

Investment and Retail Implications

This policy shift has wide-reaching economic consequences:

• UK retailers could see a boost as cheap foreign imports become more expensive.
• E-commerce companies relying on global shipping could face margin pressures.
• Share prices of logistics firms, domestic retailers, and e-commerce platforms may experience volatility as investors react.

For investors, it’s worth watching:

• Companies like Royal Mail, Amazon, FedEx, and UK-based retailers
• Sectors tied to consumer goods, logistics, and international trade
• Currency markets and tariff-sensitive stocks

Conclusion: A Tipping Point for Global Trade?

President Trump’s aggressive stance on tariffs may trigger a broader global rethink on low-value trade rules. While the policy aims to protect American jobs and combat illegal trade practices, it could fuel inflation and hinder global commerce.

For the UK, the timing is delicate. As the government seeks to close fiscal gaps and support local businesses, following the US lead might be tempting. But for consumers, businesses, and investors alike, this policy shift is more than a shipping headache—it could be a signal of rising protectionism and the start of a new chapter in global trade.

Sources: (BBC.co.uk, Sky.com)