The European Union recently announced its new regulatory framework. Beginning today, small parcel shipments from Chinese e-commerce giants Temu and Shein will be subject to an automated €2 customs fee. This welcome decision should be seen within the larger context of ongoing efforts to increase competition and compliance from foreign retailers. There will be a charge for packages that are sent to consumers’ homes. Yet, items delivered to distribution centers will only be subject to a reduced tax of €0.50.
Temu and Shein, both prominent players in the online retail market, have relied on the “de minimis” exemption, which allowed them to ship low-value items directly to customers in the United States without incurring duties or import taxes. Recent shifts in U.S. tariff policy have thrown the business model for these companies into turmoil. The net effective tariff of small packages under $800 has plummeted 120% to 54%.
The recent implementation of the new EU tax alters that equation drastically for packages under €150. Starting today, Temu and Shein will start paying customs fees for these goods. This amendment would be very disruptive to their business models in the EU market. With Temu recently claiming 92 million users across Europe and Shein over 130 million worldwide, the race is on to see who can get big first. As both companies have said all along, they were ready to work with regulators from the beginning and put forth consumer-friendly ideas.
European retailers have raised alarm bells about the unfair competitive advantages that Temu and Shein benefit from. They claim that these businesses don’t live up to the EU’s rigorous product standards. This leads to a disadvantage against local businesses and an unlevel playing field. The EU expects to make billions of euros in revenue from these new fees, which are expected to go toward the overall EU budget.
For direct-to-consumer packages, you’ll be paying a €2 flat rate fee to start. Temu and Shein are subject to a new administrative fee of $100 per parcel, thanks to the regulatory loophole fix. This all-inclusive approach is designed to make the competitive playing field more equitable. It further guarantees that every retailer has to comply with the same high standards and contribute fairly to the EU economy.
Brussels officials have been keen to reassure that these regulations aim to protect consumers and domestic businesses equally. They argue that a more equitable marketplace will in the long run serve European consumers better by fostering greater compliance and safety standards.
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