*

White House cuts de minimis tariff on China shipments to

54%

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Tariff reduction follows broader truce announcement after

Geneva

talks

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U.S. de minimis rule criticized for enabling cheap imports

and

smuggling

By Farah Master

HONG KONG, May 13 (Reuters) - The United States will cut

the low value "de minimis" tariff on China shipments, a White

House executive order said on Monday, further de-escalating a

potentially damaging trade war between the world's two largest

economies.

The tariff relief comes in the wake of Beijing and

Washington announcing a truce in their trade spat after weekend

talks in Geneva, with both sides agreeing to unwind most of the

tariffs imposed on each other's goods since early April.

While their joint statement in Geneva didn't mention the de

minimis duties, the White House order released later said the

levies will be reduced to 54% from 120%, with a flat fee of $100

to remain, starting from May 14.

The de minimis exemption, for items valued at up to $800 and

sent from China via postal services, were previously able to

enter the United States duty free and with minimal inspections.

In February, President Donald Trump ended the de minimis

exemption by imposing a tax of 120% of the package's value or a

planned flat fee of $200 - set to come into effect by June -

blaming it for being heavily used by companies such as Shein,

Temu and other e-commerce firms as well as traffickers of

fentanyl and other illicit goods.

The number of shipments entering the U.S. through the

tax-free channel exploded in recent years with more than 90% of

all packages coming via de minimis. Of those, about 60% came

from China, led by direct-to-consumer retailers such as Temu and

Shein.

Chinese online retailers Shein, PDD Holdings ( PDD )-owned

Temu and U.S. rival Amazon ( AMZN ) did not immediately respond

to requests for comment.

In Monday's order, the White House said the reduced tariffs

will take effect by 12:01 a.m. (0401 GMT)on May 14, 2025.

The plan for a $200 flat fee duty rate would also be

shelved, it said, keeping it at $100.

China exported $240 billion in direct-to-consumer goods

benefiting from de minimis worldwide last year, accounting for

7% of its overseas sales and contributing 1.3% of gross domestic

product, according to Nomura estimates.

China's yuan jumped to a six-month high against

the dollar on Tuesday, joining a global rally in riskier assets

following the broader trade deal between Beijing and Washington.

Trump's global trade war, which shredded the playbooks that

have governed international trade for decades, has shaken up

financial markets and raised fears of a recession.

BREATHING ROOM

The U.S. de minimis rule, which dates back to 1938, has been

the target of growing criticism from both Democratic and

Republican lawmakers.

Some have derided it as a loophole that allows cheap Chinese

products to flood into the United States and undercut American

industries, while also serving as cover for smuggling contraband

such as illegal drugs and their precursor chemicals.

De minimis, a legal term referring to matters of little

importance which describes the U.S. waiver of standard customs

procedures and tariffs, was one of the most generous exemptions

in the world: the EU de minimis threshold, for example, is 150

euros ($156).

The Geneva agreement slashed tariffs for both the United

States and China by 115 percentage points each, to 10% and 30%,

respectively, for at least 90 days.

The tariff pause will give online retailers like Shein and

Temu breathing space to adapt their businesses, say industry

experts, as online retailers are likely to use the time to bring

in bulk shipments and restock their U.S. warehouses.

Big beneficiaries of de minimis include online retailers

that ship goods mainly from China, such as Shein, Temu and

Alibaba's ( BABA ) AliExpress. Their growth prompted Amazon ( AMZN ) to

start its own discount service, Haul, allowing marketplace

merchants to ship $5 accessories and other items directly from

China using de minimis.

Separately, China has removed a ban on airlines taking

delivery of Boeing ( BA ) planes in the wake of the Geneva trade

deal, Bloomberg News reported on Tuesday, citing sources

familiar with the matter.

Officials in Beijing have started to tell domestic carriers

and government agencies this week that deliveries of aircraft

made in the United States can resume, Bloomberg said.

(Additional reporting by Brenda Goh and Winnie Zhou in

Shanghai, Miyoung Kim in Singapore and Chandni Shah in

Bengaluru; writing by Farah Master in Hong Kong; Editing by

Muralikumar Anantharaman and Shri Navaratnam)