US Bill Targets Chinese E-Commerce Sector, but American Consumers Will Bear Costs - Insiders

Chinese e-commerce industry insiders and experts said on Monday that a newly proposed US bill targeting Chinese online shopping platforms that have grown enormously successful in the US could hurt US consumers directly, as the move could add to prices of many daily necessities.

A group of US lawmakers introduced a bill on Thursday to end current tariff exemptions for packages valued under $800, a American daily reported.

The bill looks to bar countries such as China and Russia, which are considered "non-market economies," from being eligible for the exemption. It also seeks to have US authorities collect more information on all shipments under the $800 threshold, according to the report.

The bill is being closely watched as it covers most small cross-border packages and would affect Chinese e-commerce companies and their development in the US.

Industry insiders said that the bill is clearly intended to target China and block Chinese e-commerce companies, which have been rising quickly in the US for their affordable, high-quality products and premium digital services.

A manager from China's e-commerce platform DHgate.com surnamed Liu told the Global Times that 60 percent of the platform's business is related to the US, mainly involving daily necessities, shoes, bags and clothing. Liu noted that currently, these products are eligible for tariff exemptions.

"If tariffs are imposed, it will definitely have an impact on us," Liu said, adding that the costs would eventually be passed on to US consumers.

Shein, an online clothing retailer founded in China, would also be affected, as the US is tightening its crackdown on Chinese companies.

Cross-border e-commerce platforms such as Shein and Temu rose rapidly in the US during the pandemic due to their affordable prices and diverse offerings, bringing high-quality and low-priced Chinese products to US consumers during an economic downturn.

Shein became the most downloaded app across all categories in the iPhone App Store in the US on May 3, according to e-commerce intelligence firm Marketplace Pulse.

Li Mosi, a research professor on digital trade at the Shanghai University of International Business and Economics, told the Global Times that the success of Chinese e-commerce platforms in the US is largely due to their strength in digital services.

"Chinese companies are just following the rules, and this proposal is just another attempt to block Chinese companies, as was the case with Huawei and ByteDance. The international competitiveness of China's digital sector is precisely what the US seeks to suppress," Li said.

The companies may face higher costs and longer times for customs clearance, which will eventually lead to negative consumer experiences and increased prices for consumers, Li added.

It is unclear how much support the proposal will gain, as a separate but similar bill failed to pass Congress last year, Reuters reported. This time around, the outcome is uncertain as it depends on many factors, Li said.

Although this US policy would have an impact on cross-border e-commerce companies, the overall prospects for the sector are still positive, Wang Xin, president of the Shenzhen Cross-Border E-Commerce Association, told the Global Times on Monday.

Chinese e-commerce platforms are already taking steps to mitigate the impact by optimizing supply chain management, improving cost controls, and expanding their product range and market share, according to Wang.

"China's macroeconomic environment and cross-border e-commerce market are still good, and international consumers still have strong demand for Chinese products," Wang said.

China's total cross-border e-commerce exceeded 2 trillion yuan ($279 billion) for the first time in 2022, reaching 2.1 trillion yuan, up 7.1 percent over 2021, according to data from Chinese Customs. The US accounted for 34.3 percent of China's cross-border e-commerce exports in 2022.

This article was originally published by Global Times.