EU turns protectionist gaze on Chinese e-commerce giants Shein and Temu

Semaphore Signals: A global look at the most important events of the day.

Chinese companies’ dependence on air freight affects the cost of transporting goods

Shein and Temu are shipping their shipments by air, which has caused freight costs to skyrocket. The Wall Street Journal reported that has also fueled concerns about capacity constraints as the retail season peaks in December. Air freight is typically dominated by products like phones and computers, but the two Chinese retailers are filling cargo planes with small packages of clothing and household goods. “The e-commerce boom out of China has transformed the air freight market in an incredibly short period of time,” an analyst told the Journal. But Shein and Temu aren’t the only ones to blame for rising freight costs: Houthi rebel attacks on shipping in the Red Sea have also forced retailers to send more shipments by air, driving up prices.

‘Growing momentum’ behind protectionist agenda

The proposed action — which would require the approval of every EU member state — is the latest in a series of protectionist moves to curb imports of cheap Chinese goods that the EU sees as a threat to local manufacturers, particularly in the automotive sector, Bloomberg noted. The moves could be coordinated on both sides of the Atlantic: The United States is also considering similar measures to exempt “low-value personal packages” from tariffs, the outlet reported.

China’s Neighbors May Soon Join West’s Protectionist Attack

As the economist wrote in the Nikkei, the West’s protectionist agenda could inspire China’s regional neighbors: “Ultimately, it comes down to protecting domestic companies and jobs. While many Asian policymakers will have to make tough decisions, the path is clear.” The laissez-faire approach taken by many Asian countries poses a challenge, as China’s excess capacity in several key sectors squeezes local businesses. Manufacturers in Thailand, Indonesia and South Korea have felt the squeeze as a result of Chinese goods, while entire industries such as metals and chemicals have been hit, the economist added.