The EU’s new fee structure will hit Chinese retail behemoths Temu and Shein the hardest. Very soon, both companies are required to pay a two-euro fee. This fee only covers packages shipped directly to consumers within the EU. In part, this move was to bring regulation to international e-commerce. It further provides a remedy to European retailers’ long-standing concerns about unfair competition.
Temu and Shein had flourished as e-commerce businesses with the help of the “de minimis” exemption. Under this rule, they were allowed to ship a ton of low-value items directly to US customers with no duties or import taxes. From now on, packages under 150 euros will not be eligible for the exemption. As such, both companies will now experience the new fee structure. The tariff on the previously duty-free small packages valued $800 or less has been dramatically reduced from 120% to 54%. This tax reduction will go a long way to help relieve the economic pressures retailers have been under.
Significant Impact on European Operations
With a substantial user base in Europe—92 million for Temu and over 130 million for Shein—this new tax structure is expected to have significant implications for their operations. European retailers have been vocal against Temu and Shein from the outset. They claim that these companies have a distinct competitive edge by being able to avoid customs duties and taxes that companies operating in the country have to remit. Further still, these Chinese behemoths have drawn the ire of EU officials for repeated failures to adhere to the EU’s strictest of product standards.
Both companies have said they are committed to cooperating with EU regulators. As these regulations change, they are dedicated to getting ahead of consumer expectations. The implementation of this new two-euro fee on direct-to-consumer shipments represents an enormous impact on the way e-commerce will be handled inside the EU. This new rule is meant to level the playing field in the marketplace among European retailers.
On top of direct payment of such fees, parcels that Temu and Shein send to warehouses will be taxed at a lower tax rate. In reality, you’ll pay just 0.50 euros per parcel. The per-parcel flat fee remains fixed at $100. This comes in addition to the compliance cost that companies will incur as they transition to the new regulations. The European Commission explicitly wants to see this kind of new revenue feed into the EU budget in a beneficial direction.
The EU is certainly not sitting on their hands, grappling with the shifting sands of global trade and e-commerce. It is too soon to tell if these measures would really help local retailers compete and what changes Temu/Shein may make to adapt their business models to comply with these new requirements.
What The Author Thinks
The EU’s introduction of new fees and tighter regulations on companies like Temu and Shein marks a decisive effort to rebalance the competitive landscape for European retailers. While these measures address long-standing concerns over unfair advantages, their real-world impact will depend on enforcement and the ability of global e-commerce giants to adapt. This shift underscores the growing need for comprehensive regulatory frameworks that keep pace with rapidly evolving international trade.
Featured image credit: Heute
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