End of tax-free loophole disrupts air shipments from China to US
TOI World Desk | TIMESOFINDIA.COM | Jul 05, 2025, 00:41 IST
( Image credit : TIL Creatives, TOIGLOBAL )
Asian air cargo faces a downturn. This follows the United States ending tax breaks on China's low-value goods. E-commerce firms are shifting focus. Data reveals a drop in air cargo demand from Asia to North America. Low-value shipments see a big fall. Airlines are adjusting routes. Companies are diversifying to Europe and Latin America. Trade relations remain uncertain.
Air cargo shipments from Asia have seen a sharp decline following the United States' decision to end tax exemptions on low-value goods from China. This change, implemented in May 2025, has had a significant impact on global e-commerce, as companies shift their focus to alternative markets.
The U.S. previously allowed shipments valued under $800, typically sent by e-commerce platforms like Shein and Temu, to bypass tariffs under the so-called "de minimis" rule. However, since May 2, 2025, goods from China and Hong Kong that fall into this category are now subject to tariffs of up to 145%, though rates were later adjusted to around 30% following a mid-month trade agreement between the U.S. and China.
Data from the International Air Transport Association (IATA) shows that air cargo demand from Asia to North America fell by 10.7% in May 2025, compared to the same period last year. Low-value e-commerce shipments, in particular, experienced a dramatic 43% drop from April to May 2025. These shipments, which had previously accounted for a significant portion of air freight from China to the U.S., are now being redirected to other regions like Europe and Southeast Asia.
As a result of the reduced demand, airlines have adjusted their schedules, with some pulling freighter aircraft from trans-Pacific routes. Direct freighter capacity between China and the U.S. in June 2025 was 11% lower than in March, erasing previous capacity growth.
While the new tariff rates have caused disruption in the U.S.-bound market, the situation has also prompted e-commerce companies to diversify their shipping destinations. Many are now focusing on markets like Europe and Latin America, where demand for low-value goods has been increasing. Air cargo consultancy Rotate reports significant export growth to the European Union and Asia-Pacific region, as businesses look to replace lost U.S. demand.
Despite the challenges, businesses had anticipated the end of the de minimis exemption and adjusted their strategies accordingly. However, the ongoing uncertainty surrounding U.S.-China trade relations, with more tariffs set to be re-imposed in July 2025, means that the long-term effects of these changes are still unfolding.
In the wake of these policy shifts, air cargo operators and e-commerce companies are facing a period of adjustment, with some cutting back on scheduled freighter flights. The decline in air cargo shipments to the U.S. reflects the broader impact of shifting trade policies and their influence on global shipping routes.
The U.S. previously allowed shipments valued under $800, typically sent by e-commerce platforms like Shein and Temu, to bypass tariffs under the so-called "de minimis" rule. However, since May 2, 2025, goods from China and Hong Kong that fall into this category are now subject to tariffs of up to 145%, though rates were later adjusted to around 30% following a mid-month trade agreement between the U.S. and China.
Data from the International Air Transport Association (IATA) shows that air cargo demand from Asia to North America fell by 10.7% in May 2025, compared to the same period last year. Low-value e-commerce shipments, in particular, experienced a dramatic 43% drop from April to May 2025. These shipments, which had previously accounted for a significant portion of air freight from China to the U.S., are now being redirected to other regions like Europe and Southeast Asia.
As a result of the reduced demand, airlines have adjusted their schedules, with some pulling freighter aircraft from trans-Pacific routes. Direct freighter capacity between China and the U.S. in June 2025 was 11% lower than in March, erasing previous capacity growth.
While the new tariff rates have caused disruption in the U.S.-bound market, the situation has also prompted e-commerce companies to diversify their shipping destinations. Many are now focusing on markets like Europe and Latin America, where demand for low-value goods has been increasing. Air cargo consultancy Rotate reports significant export growth to the European Union and Asia-Pacific region, as businesses look to replace lost U.S. demand.
Despite the challenges, businesses had anticipated the end of the de minimis exemption and adjusted their strategies accordingly. However, the ongoing uncertainty surrounding U.S.-China trade relations, with more tariffs set to be re-imposed in July 2025, means that the long-term effects of these changes are still unfolding.
In the wake of these policy shifts, air cargo operators and e-commerce companies are facing a period of adjustment, with some cutting back on scheduled freighter flights. The decline in air cargo shipments to the U.S. reflects the broader impact of shifting trade policies and their influence on global shipping routes.