EU considers scrapping tax exemption that helps Shein and Temu

The European Union is working on a proposal to impose import duties on cheap goods purchased on online platforms outside the bloc, a move that would primarily target Chinese retailers such as Temu, AliExpress and Shein, according to people familiar with the matter.

The EU currently applies a duty-free threshold of €150 ($161) for online purchases for small gifts or personal parcels, but that has allowed a surge in low-value imports from such platforms, said the people, who spoke on condition of anonymity.

The proposal would aim to stem this flow and would apply to all non-EU e-commerce platforms, they added. The plan was first reported by the Financial Times.

Spokespeople for the European Commission did not immediately respond to a request for comment.

It remains to be seen whether member states can reach a consensus to act, but the move adds to a growing protectionist movement against Chinese companies, whose cheaper products threaten local producers. This month, the EU will introduce provisional tariffs of up to 38% on Chinese electric vehicles.

In the United States, which has a similar duty exemption for low-value personal packages, several bills are currently before Congress that would eliminate or lower what is known as the de minimis threshold.

However, inflation in the United States and Europe means there is substantial demand among consumers for cheap products sold by platforms such as PDD Holdings Inc’s Temu and those operated by Alibaba Group Holding Ltd. The rise of Shein has taken market share from European clothing retailers such as Hennes & Mauritz AB and Inditex’s Zara, while Amazon plans to launch its own low-cost online store.