Farewell to the $800 tax-free era! Self-shipping sellers: The sky is falling

It is learned that the United States Postal Service (USPS) announced on February 5, 2025 that it would resume accepting inbound packages from mainland China and Hong Kong, having announced the suspension of the service the day before (February 4).

This "change of policy overnight" decision has sparked heated discussions in the cross-border e-commerce industry. Industry insiders pointed out that the USPS's suspension of acceptance is more of a symbolic move. Data shows that more than 90% of cross-border parcel transportation in the United States is currently dominated by private logistics giants such as SF Express and UPS, and the USPS's market share has shrunk significantly. Therefore, its suspension of acceptance has limited impact on the overall cross-border e-commerce. The previous changes were also generally seen as a chain reaction of the Trump administration's tough trade policy.

Although the USPS's move did not cause substantial losses to Chinese merchants, it is worth noting that the tariff hammer has already fallen and the cross-border e-commerce industry is facing unprecedented challenges.

All major platforms have started "survival mode", and a breakout battle that concerns the survival of the industry is being fiercely staged on the global trade map.

With the implementation of the tariff policy, cross-border e-commerce platforms such as Temu and SHEIN, which mainly rely on the low-cost direct mail model, will face the first round of impact. However, these platforms are not sitting still.

According to industry sources, some cross-border e-commerce platforms are trying to adjust their US flight plans in response to the US tax reform policy. Two FedEx planes serving a cross-border e-commerce platform were grounded on February 4. At the same time, some platforms have completed price adjustments for fully managed merchants on the day the tariff policy was implemented.

At present, although Temu and SHEIN have not yet made any definite new moves, when Temu, SHEIN and other platforms vigorously promoted the semi-custodial model last year, industry insiders pointed out that this model was, on the one hand, a new business developed by platforms to break through the limitations of full custody, and on the other hand it may also be to cope with the tariff risks that were still pending at the time.

After the new tariff policy came into effect, there were reports in the industry that Temu insiders revealed that its US site is accelerating the transformation from a full-hosting to a semi-hosting model.

However, it is worth noting that Temu's local warehouse plan still accounts for a relatively low proportion of its overall business. Citi analysts previously estimated that by the end of 2024, the total merchandise transaction volume of local warehouses would only contribute more than 20% of the transaction volume in the US market. Therefore, the new tariff policy will still have a significant negative impact on Temu's growth in 2025 and beyond.

On the whole, SHEIN's semi-hosted model is mainly aimed at sellers who have goods in overseas localities. However, it is not limited to SHEIN's official overseas warehouses, but can also be self-built warehouses, third-party overseas warehouses, Amazon warehouses, etc. It only requires that the goods must be in stock overseas, but merchants can manage inventory and logistics independently. This has also effectively reduced the reliance on small-amount tariff exemption policies to a certain extent.

Industry insiders believe that the overseas warehouse model can better adapt to policy changes in the target market and reduce operational risks caused by policy adjustments. A research report from China Merchants Securities pointed out that as sellers grow in scale, branding, and financial strength, the overseas warehouse model will gradually become the mainstream and will coexist with the direct delivery model for a long time and complement each other.

At the same time, Temu and SHEIN are also trying to bypass tariff barriers through localization.

It is understood that Temu has been attracting Chinese sellers with inventory in U.S. warehouses to join its website since last year so that packages can be delivered from the U.S. to U.S. shoppers. This strategic shift will enable Temu to establish a more stable supply chain system in the U.S. market on the one hand, and avoid some tariff impacts on the other.

It is worth noting that Temu is also gradually reducing its dependence on the US market. According to the latest strategic plan, Temu is accelerating its expansion into the European and Middle Eastern markets, striving to balance the risks of the US market by increasing its market share in these regions. Currently, "de-USization" has become an important issue for Temu. According to a previous report by The Information, Temu will reduce the proportion of its merchandise sales in the US market from the current 60% to 30% by 2025.

George Chiao, president of SHEIN's U.S. business, also said earlier that three large distribution centers will be built in the U.S. As of February 2024, the distribution center in Whitestown, Indiana has been launched with 1,000 employees.

It can be seen that this sudden "tariff storm" has pushed cross-border e-commerce platforms collectively into survival mode, and a life-and-death breakout battle has quietly begun on both sides of the Pacific.

As the saying goes, people do not share the same joys and sorrows. In the US tariff increase, domestic sellers who ship their own goods may start a round of elimination, while sellers with overseas warehouses are calm and watch the battle.

Take Amazon's FBA sellers as an example. They ship goods to Amazon's overseas warehouses in advance through bulk delivery, and usually declare customs at a lower purchase price, thus keeping the tariff base at a relatively low level. Therefore, even the newly imposed 10% tariff will have a relatively limited impact on the cost of a single item.

According to a research report by CITIC Securities, under the overseas warehouse stocking model, it is estimated that 30% to 40% of the terminal selling price will be recognized by the customs as the transaction value, and the additional 10% tax rate is expected to have an impact on the terminal retail price of 3% to 4%.

In addition, due to the large volume of goods, FBA sellers can spread the costs of the newly added tariffs across a large number of goods, and the cost increase for a single item is almost negligible.

As for sellers who ship their own goods (such as FBM), their competitiveness has been greatly weakened after the cancellation of the small exemption policy of $800. At the same time, because FBA sellers prepare goods in overseas warehouses in advance, they are still as stable as a rock in the face of policy changes, and may even take this opportunity to grab more market share.

However, for sellers who rely on the self-delivery model, this news is like a bolt from the blue. An industry practitioner said helplessly: "Our company announced bankruptcy when it opened this year. We mainly rely on self-delivery in the United States. The profit of customized products is only 15%. Now the freight forwarding fee has skyrocketed by 30%-50%. The boss announced the disbandment in the DingTalk group today."

▲ Picture source: Seller’s disclosure

In addition to Amazon's self-shipping sellers, small and medium-sized sellers on platforms such as Temu and SHEIN that rely on direct mail models and independent website sellers (about 80% of independent websites use small package direct mail) will also be in trouble. It is understood that under the small package model, it is estimated that 60% to 70% of the terminal sales price will be recognized by the customs as the transaction value, and the corresponding tariff will affect the terminal retail price by 15% to 20%.

Previously, in order to cut costs, these sellers often divided large goods into small packages to enter the United States, thereby enjoying tariff exemptions below $800. Even veterans of cross-border logistics will cleverly distribute packages to different consignees and choose to receive the goods at similar addresses to achieve tax avoidance.

However, with the cancellation of the "minimum tariff exemption", these sellers have to face tax rate costs of 15% to 20%, and some long-tail SKUs may be forced to exit the market due to zero profits.

Has the implementation of the tariff policy had any impact on your cross-border business? Have you taken corresponding adjustment measures? Feel free to share your views and experiences in the comments section~