Protectionism in Cross-Border E-Commerce Will Negatively Affect American Consumers

Illustration: Liu Xiangya/GT

White House officials announced Friday their intention to propose restrictions on the use of the so-called de minimis exemption, which currently allows products worth less than $800 to be shipped directly to American consumers without customs declarations or duties. The proposed restrictions could create uncertainty for cross-border e-commerce giants from China and elsewhere, Bloomberg reported.

Objectively speaking, if the United States decides to impose restrictions on low-value shipments entering the U.S. market, this would negatively impact cross-border e-commerce businesses from all countries exporting to the U.S. market, as well as those importing cross-border e-commerce shipments into the U.S.

The U.S. government’s proposed restrictions reflect its focus on protecting domestic industries, particularly in the textile and apparel sector, where American manufacturers are concerned about the impact of cheap imports. But there is no doubt that inexpensive, high-quality international products, especially those from China, have helped boost the purchasing power of American consumers.

For products such as apparel and textiles in packages with declared values ​​below $800, the cost efficiency of Chinese products is incomparable to those from other countries and regions. Therefore, the potential strong backlash from American consumers and American cross-border e-commerce importers poses a challenge to Washington as it continues to pursue these mutually harmful protectionist policies.

For example, American companies such as Amazon and Walmart have long imported goods under the de minimis exemption. If the US were to revoke this exemption, costs for these companies would undoubtedly increase, which would limit their growth and ultimately have a negative impact on the US economy.

The National Foreign Trade Council — a U.S. trade association whose members include international shippers FedEx, UPS and DHL, as well as retailers Amazon and Walmart — defended the exemption, arguing that it is “essential to America’s economic health and supply chain efficiency.” Without the exemption, costs would rise for American consumers and small businesses, the council said, according to the Associated Press.

Undoubtedly, if the US takes further steps in the wrong direction of protectionism, it will affect Chinese cross-border e-commerce and some industries, such as textiles, that supply profitable products to the US market. However, this negative impact should not be exaggerated.

The rapid development of some cross-border e-commerce and textile industries in China over the years – exceeding external expectations – was based not only on international free trade rules, but more importantly, on the accelerated development of domestic digital transformation and the rapid modernization of the inherent advantages of the manufacturing sector. This is something that US protectionism cannot curb.

The advantages supporting China’s cross-border e-commerce also include new business models supported by the rapidly developing and robust digital economy. China’s cross-border e-commerce can offer high-quality and customized products at competitive prices, mainly through business model innovation, rather than just relying on relatively low labor costs and free trade advantages.

China’s foreign trade is rapidly gaining ground in both digitalization and green transformation. There are more than 120,000 cross-border e-commerce enterprises in China. In the past five years, the scale of China’s cross-border e-commerce has increased by more than 10 times, according to media reports. These figures reveal the solid momentum of China’s digital foreign trade sector.

Although some Western politicians are concerned about the rapid growth of China’s cross-border e-commerce and have even irrationally begun to advocate a win-win approach through protectionism and tariffs, the only way to help American businesses and industries succeed in a competitive marketplace is to embrace free trade principles, accelerate innovation, and embrace the trends of digitalization and green transformation in global trade.

The proposed restrictions on the de minimis exemption not only threaten the viability of cross-border e-commerce, but also risk harming the interests of U.S. consumers and businesses that use these channels. As the global trade landscape evolves, it is critical for policymakers in Washington to understand that protectionist measures ultimately undermine the broader economic interests of their own businesses and consumers.

The author is a reporter for the Global Times. [email protected]