EU Considers Closing Duty Free for Cheap Goods, Helping Shein, Temu and AliExpress

The European Union is working on a proposal to impose import tariffs on cheap goods purchased through online platforms outside the bloc, a move that would primarily target Chinese retailers such as You, AliExpress AND She inaccording to people familiar with the matter.

The EU currently has a duty-free threshold of 150 euros ($161) for online purchases, intended for small gifts or personal shipments, but that has allowed a rise in imports of low-value goods from these platforms, according to the people, who asked not to be identified.

The proposal would aim to stem that flow and would apply to all non-EU e-commerce platforms, they added. The plan was first reported by the Financial Times.

European Commission spokespeople did not immediately respond to a request for comment.

While it is unclear whether there will be consensus among member states to take action, the effort adds to the growing momentum for protectionism against Chinese companies, as their cheaper goods pose a threat to local producers. This month, the EU will introduce temporary tariffs of up to 38 percent about Chinese electric vehicles.

In the U.S., where a similar duty-free exemption applies to small-value personal shipments, there are several bills before Congress that would close or reduce the so-called de minimis threshold.

Still, inflation in the US and Europe means consumers are seeing significant demand for cheap goods sold on platforms such as Temu, owned by PDD Holdings, and those run by Alibaba Group Holding.

The growth of the Shein brand has taken market share from European clothing retailers such as Hennes & Mauritz and Inditex-owned Zara, while Amazon is planning to launch your own affordable online store.