In 2024, 4.6 billion small shipments with a value of less than 22 EUR entered the European Union. Most arrive by cargo plane in Liège, but also in Copenhagen, Milan or Madrid. Repeated inspections by customs officers revealed that the product quality is often inadequate, and items tend to pose a health risk to users. On Wednesday (05FEB25) Brussels kicked off an initiative to regulate online retailers and the import of cheap goods from third countries.
The e-tailers SHEIN and TEMU are particularly affected by Brussel’s advance, as are Amazon and Etsy. No customs duties are levied on their products entering the EU if the value of a single shipment is less than 150 euros. The bureaucratic effort would be too great and the revenue from duties would be too low for filling the coffers of the EU member states, as shown in the past. What also favors these e-tailers financially is the fact that they only pay 4.8% in turnover taxes (VAT), in contrast to 19%, 20%, 22% or even more percent in most EU countries. This is the case, because they have based their EU headquarters in tax haven Ireland.
EU deprives them of privileges
For a long time, Brussels turned a blind eye to the activities of foreign low-cost suppliers. Meanwhile, however, the EU competition watchdogs seem to have woken up from their hibernation. On Wednesday (05FEB25) the Commission announced plans to levy handling fees for e-commerce shipments entering the block in order to offset the costs of customs inspections. A cornerstone of the intended step is the abolition of the current de minimis tax exemption for shipments valuing less than 150 euros. Simultaneously, Brussels announced measures to step up controls at airports to prevent the trade of unsafe or non-EU-compliant low-priced products.
Constant breaches of consumer protection
Recent checks at Liège Airport, one of the main e-com hubs in Europe, have revealed that the content of many e-com shipments violate EU safety regulations, or the products are made of hazardous materials which pose a health risk to users, particularly children.
Some of the complaints are alarming, says Sylvia Maurer from the European Consumer Organization BEUC: “We found many chemicals of concern in children’s toys or cosmetics. But also, electrical products that can cause fires or smoke detectors that don’t report smoke. Motorcycle helmets that meet absolutely no safety standards and break immediately. These products pose a huge risk for EU consumers,” she warned.
Following repeated breaches of consumer protection, Brussels announced that proceedings have been opened against Chinese e-tailer SHEIN.
EU Parliament still needs to consent the advance
EU Trade Commissioner Maros Sefcovic stated; “The number of parcels has risen sharply because some of them are deliberately fragmented in order to remain under 150 euros. This means an enormous amount of work for the customs authorities.” The planned reform envisages that the e-tailers themselves, rather than the buyers, will be liable for customs clearance and possible duties. However, the proposed new rule still must be consented by the EU Parliament before it becomes practical.
Only hours before the EU announced its decision on e-com, U.S. President Trump had imposed a 10% tax increase on all Chinese imports. In addition, hesuspended the “de minimis” customs exemption that allowed U.S. shoppers and importers to avoid duties on packages worth below USD 800.
However, market experts point out that ending de minimis is a double-edged sword. It could result in price hikes for American shoppers, but simultaneously also lower the tsunami of China produced low-cost products flooding the U.S., so playing politically into Trump’s hands.
Who does the elimination of de minimis hurt more: China or the U.S.?
Id this measure will have any effect on the trade flows between China and the U.S. remains to be seen. The National Association of Manufacturers are convinced that it will harm U.S. consumers instead. In a study conducted together with other industry groups the authors warned of steep price increases for U.S. consumers in combination with red tape hurdles and administrative fees jeopardizing imports. “Eliminating de minimis is the equivalent of a tax hike that would disproportionately impact small business owners and low-income consumers who purchase affordable goods online,”their bulletin reads. Next to Chinese online retailers, the main victims of the new regulation are likely to be low-income American households. The days when they could buy T-shirts for two bucks or pants for ten dollars seem to be gone, critics warn. The de minimis threshold was previously USD 200 but increased to USD 800 in 2015, when the Trade Facilitation and Trade Enforcement Act became law, ensuring a fair and competitive trade environment. Even under the Biden administration, the complete abolition of a tax-free allowance was discussed, which would mean that all imported goods would have to be cleared through customs according to their value. However, this is extremely time-consuming and difficult to control due to an increasing lack of trained personnel.
