Low-Value Parcel Crackdown: What China-Sourcing Merchants Must Do for EU & U.S. Markets
Introduction
The era of ultra-low-value parcels flowing from China into the U.S. and EU duty-free or minimal-compliance is ending. Major regulatory reforms are underway — in the U.S. the removal of the “de minimis” exemption; in the EU the phasing out of the €150 threshold and imposition of handling fees — and these reforms have direct, material consequences for merchants sourcing from China and targeting North American or European end-markets.
For merchants and forwarders whose business model hinges on China-sourced low-value goods being shipped cheaply to consumers or via consolidation hubs, the writing is on the wall. This article examines:
- What the regulatory shifts are in the U.S. and EU for low-value parcels.
- How these changes impact sourcing, logistics, pricing and compliance.
- What China-sourcing merchants must do now to adapt — practical strategies.
- A 90-day action plan.
- Key risk signals and what to monitor.
1. The Regulatory Landscape: U.S. & EU Low-Value Parcel Reforms
1.1 United States: End of the De Minimis Exemption
- In 2025 the U.S. formally ended the long-standing “de minimis” exemption (under which parcels under USD $800 could enter duty-free) for China/Hong Kong shipments on May 2. ([turn0news13]AP News)
- According to the Universal Postal Union (UPU), international postal traffic from many countries to the U.S. plunged around 81% following the change. 新闻周刊
- The reform shifts the duty-collection burden onto carriers and requires more detailed data submission to U.S. Customs and Border Protection (CBP).
- Result: shipments that were once “cheap and easy” now face duty, paperwork, oversight, delay — particularly impactful for China-origin low-value items.
1.2 European Union: Duty-Exemption Removal, €2 Handling Fee & Platform Liability
- The EU is advancing reforms to eliminate the duty-free exemption for parcels under €150 and to impose a flat €2 handling fee per parcel delivered to consumers (or €0.50 if routed via an EU warehouse) to recover customs/surveillance costs. 金融时报+1
- In early 2025, the EU reported that ~4.6 billion low-value parcels entered annually — 12 million daily — with 91% from China. 卫报+1
- The reforms also increase platform and marketplace liability (e.g., Temu and SHEIN) for product safety, origin, documentation. Reuters
- Key take-aways: the cost stack for low-value parcels is increasing, compliance risk is rising, and business models based on minimal import cost are under threat.
2. Impacts on Merchants Sourcing from China for EU & U.S. Markets
2.1 Landed Cost & Profitability Erosion
- Parcels that once entered duty-free now face duties (U.S.) or handling fees/duty (EU), materially raising landed cost.
- For ultra-low-value items (e.g., goods valued at USD $10-30 or €5-20), even a €2 handling fee or duty equivalence can eliminate margin.
- Merchants must revisit cost models: freight, duty/VAT, handling, returns, compliance — the “cheap parcel” arbitrage is narrowing.
2.2 Logistics & Route Model Disruption
- Many merchants used direct China → consumer shipments (often via postal networks) under low-value thresholds. These models are now unstable.
- Forwarders/postal operators began suspending or pausing China→U.S. parcel services in August 2025 due to regulatory shifts. 新闻周刊
- For EU shipments, merchants may need to shift to EU-warehouse-based logistics (bulk import → EU hub → local delivery) to avoid higher fee exposure.
- The complexity of routing, paperwork, customs clearance and compliance increases — raising lead-time risk and inventory cost.
2.3 Compliance, Documentation & Platform Risk
- Greater scrutiny on documentation: correct classification, origin, value, safety compliance, platform liability. EU investigations into Temu/SHEIN highlight this. Reuters
- Incorrect or missing data may lead to parcel seizure, delays, higher cost, cancellations.
- Platforms and merchants must treat each parcel as a regulated import, not simply bargain e-commerce.
2.4 SKU Portfolio & Business Model Reassessment
- Low-margin, very low-value SKUs are the most vulnerable: cost increases may eliminate profitability.
- Merchants must segment SKUs: high-value, premium margin SKUs may sustain the increased cost; low-value volume SKUs may need rethinking, bundling or higher price.
- Inventory and fulfilment strategy may shift from many small parcels to consolidated shipments or warehouse-based fulfilment.
2.5 Competitive & Strategic Implications
- Merchants who adapt early and optimise will gain competitive advantage — others may be locked out.
- Domestic/regional manufacturing and fulfilment (Europe or North America) may become more competitive relative to China-origin ultra-low-value importing.
- The “cheap China parcel flood” that undercut local retailers is now being addressed — so price advantage may compress.
3. What China-Sourcing Merchants Must Do: Strategic Response
3.1 Rebuild Your Cost and Profit Models
- Immediately update landed-cost models to include: duty (U.S.), handling fee (EU), increased compliance cost, potential returns/delays.
- For each SKU, calculate: freight cost + import duty/fee + customs/handling + last-mile delivery + returns risk.
- Highlight breakeven price: if landed cost pushes your price above consumer tolerance, you must adjust SKU mix or route.
3.2 Rethink Logistics & Fulfilment Strategy
- Transition some operations to EU or U.S./Canada warehouses: bulk ship from China, then fulfil regionally to avoid direct low-value import exposure.
- Use consolidation: fewer, larger shipments to hubs rather than many small parcels direct from China. This amortises fixed costs better.
- For North America: ensure carriers/forwarders can handle duty payment, classification, and have data-link to CBP to avoid stoppages or returns.
- For EU: consider routing via EU warehouse to benefit from lower handling fee (€0.50) or avoid direct consumer-parcel handling fee (€2) where possible.
3.3 Segment & Optimise SKU Portfolio
- Classify SKUs by value, margin, demand, time-sensitivity:
- Tier 1: High-margin, premium items — more cost tolerance.
- Tier 2: Mid-value – reassess process, consider consolidation or slower logistics.
- Tier 3: Ultra-low-value items — may need to discontinue, bundle, increase price or absorb cost.
- Use bundling: group several low-value items into one shipment to reduce per-parcel cost.
- Consider alternative sourcing (near-shore, regional manufacturing) for items that no longer work under China-direct parcel cost structure.
3.4 Compliance & Documentation Strengthening
- Enforce correct HS classification, origin declaration, value accuracy for customs/CBP/EU authorities.
- Vet products for safety, conformity (especially for EU) — avoid being flagged for non-compliance.
- Maintain data systems to capture and transmit necessary information for duty/fee collection and customs clearance.
- Work with carriers/forwarders/postal operators who are compliant and provide full transparency.
3.5 Customer Communication & Pricing Transparency
- Communicate changes to customers (especially B2C): note that shipping and duty may increase; set expectations regarding lead-time and price.
- Offer “pre-paid duty and tax” shipping options rather than surprise costs on delivery.
- Adjust pricing strategy: separate shipping+handling/fee components from product cost, avoid hidden cost erosion of margin.
3.6 Monitoring & Adaptation
- Track regulatory updates in U.S. and EU (duty/fee thresholds, platform liability, safety enforcement).
- Monitor freight/parcel cost variances, carrier service changes, suspension of services.
- Set up KPI dashboard: landed cost per unit, compliance cost per parcel, percentage of SKUs losing margin, lead-time variance, cost of returns.
- Be ready to pivot sourcing or fulfilment options quickly if cost dynamics change further.
4. 90-Day Action Plan for Merchants
| Timeframe | Key Actions |
|---|---|
| Days 0-30 | • Update landed cost models for all SKUs including new duty/fee exposures. • Identify SKUs under threat (low margin, low value) and tag for review/discontinuation. • Audit your carriers/forwarders from China → U.S./EU: evaluate their compliance readiness, duty/fee handling capacity. • Engage with warehouse/fulfilment providers in EU/U.S. to evaluate shift from direct parcels to regional fulfilment. |
| Days 31-60 | • Pilot change: route selected SKUs via regional hub rather than direct China→consumer parcel. • Review pricing strategy: include shipping+duty clearly; offer bundled orders or minimum order value to offset cost increase. • Strengthen compliance: ensure product safety, origin, HS codes, and documentation. • Communicate to customers or sellers about shipping cost/lead-time changes and why. |
| Days 61-90 | • Analyse pilot results: landed cost, delivery speed, customer satisfaction, margin impact. • Finalise fulfilment model shift: bulk China → Hub → regional delivery vs direct parcels. • Adjust SKU portfolio: discontinue or raise price on non-viable items; scale up viable items. • Establish monitoring system: cost per parcel, duty/fee component, lead-time variance, classification errors, returns/penalties. |
5. Key Risk Signals & What to Monitor
- Regulatory shock: sudden change in duty/fee threshold or enforcement (e.g., EU final adoption of reforms).
- Carrier/postal service disruption: large-scale parcel suspensions or re-routing due to compliance issues (as seen with the 81% drop in China→U.S. postal traffic). 新闻周刊
- Cost spikes: freight/parcel cost jumps due to compliance overhead, screening, duty/fee pass-through.
- Margin erosion: SKUs showing squeezed margin after updated landed cost modelling.
- Compliance failures: seizures, returns, high inspection rates causing lead-time or cost blow-out.
- Consumer behaviour change: higher landed cost leading to lower conversion or higher returns from consumer markets.
Conclusion
For merchants sourcing from China and shipping into the U.S. or EU, the low-value parcel landscape has changed dramatically. The era of minimal duties and light oversight for ultra-low-value consignments is ending — replaced by higher fees, deeper compliance, route restructuring, and cost recalibration.
Those who adapt now—revising cost models, shifting fulfilment strategy, fortifying compliance, and clearly communicating with customers—will preserve margin, maintain service reliability, and gain competitive positioning. Those who delay may face margin collapse, logistics disruption, and erosion of business models built on “cheap China parcels”.
If you’re sourcing from China, you must treat each parcel like a fully-regulated import, not simply a low-cost shipment. Act quickly, strategically, and with operational discipline to thrive in the new regime.
