The European Union is considering imposing tariffs on goods sold by Chinese e-commerce giants SHEIN and Temu to prevent low-quality products from China flooding into various countries in the EU.
According to a report in the Financial Times of the UK citing three sources, the European Commission is set to propose later this month the elimination of the current tax-free threshold for goods below 150 euros.
This would apply to any online retailers shipping directly to EU customers from outside the EU. The main targets are Chinese e-commerce platforms Temu and AliExpress, as well as the online fast-fashion retailer SHEIN.
The European Commission stated that last year, the EU imported 23 million items below the tax-free threshold of 150 euros. The Commission mentioned that “the massive scale of e-commerce is testing the limits of customs.”
Another potential measure being considered is requiring large platforms to register for online value-added tax (VAT) payment. Since July 2021, the EU abolished the exemption from importing VAT for goods below 22 euros, mandating that all goods imported to the EU, regardless of value, must pay VAT.
The European Commission had already proposed abolishing the tariff threshold last year but may now seek to expedite the adoption of the proposal to address the surge in cheap imported goods. These proposals will be presented to the new European Commission set to take office later this year.
Additionally, last Friday (June 28), the European Commission requested operators of SHEIN and Temu to provide information on measures to combat illegal products and protect users.
This request is based on the EU’s Digital Services Act, which regulates services with over 45 million monthly active users in the EU.
Apart from US IT giants like Facebook and Amazon, SHEIN and Temu were also singled out in April and May respectively. Once designated, these companies must take action against counterfeit products that infringe intellectual property rights and harmful products to minors.
From 2022 to 2023, EU countries reported a sharp increase of over 50% in the number of dangerous products, reaching more than 3,400 varieties. Cosmetics, toys, electrical appliances, and clothing are the products with the most safety issues.
The EU toy industry has accused Chinese retailers of shipping dangerous toys to Europe. The Toy Industries of Europe stated in February this year that they purchased 19 toys from Temu and found none of them complied with EU standards, with 18 posing genuine safety risks to children.
Temu, a subsidiary of Pinduoduo, China’s largest e-commerce platform, stated, “We no longer list all 19 products on our EU website… Product safety is our top concern, and we have strengthened monitoring of such products and related requirements.”
Temu also stated that its growth does not rely on cheap products and that they are open to any policy adjustments that serve consumers’ interests and provide support.
AliExpress, owned by Alibaba Group, stated that they are working with legislators to ensure they are and will remain compliant in the EU market.
SHEIN, headquartered in Singapore and founded in Nanjing, China in 2008, expressed its “full support” for the efforts to reform tariffs.