China has officially filed a complaint with the World Trade Organization (WTO) against U.S. President Donald Trump’s new 10% tariff on Chinese imports, arguing that the move is protectionist and violates WTO rules.
The complaint, submitted on Wednesday, also challenges Trump’s revocation of a duty-free exemption for low-value packages, a decision that has created confusion among shippers and retailers.
Beijing’s request for trade consultations with the U.S. comes as businesses grapple with the abrupt closure of the “de minimis” exemption, which allowed package imports valued under $800 to enter the U.S. duty-free. E-commerce giants such as Shein, Temu, and Amazon have relied heavily on this provision to facilitate cross-border shipments.
A U.S. Customs and Border Protection (CBP) official stated that all small packages from China and Hong Kong must now have customs entries on file before arrival.
The lack of proper documentation could result in cargo being returned to the sender, further disrupting supply chains.
The WTO confirmed receiving China’s consultation request, which claims that the new tariffs are based on “unfounded and false allegations” regarding China’s role in the fentanyl opioid crisis. Beijing argues that the duties are discriminatory, exclusively targeting Chinese-origin goods, and contravene the U.S.’s obligations under WTO agreements.
Implications of the WTO Dispute Process
China’s complaint initiates a dispute resolution process that could ultimately result in a ruling against Trump’s tariffs, similar to a 2020 WTO decision that found his first-term China tariffs violated trade regulations.
However, enforcement remains a challenge as the WTO’s Appellate Body has been dysfunctional for years due to the U.S. blocking judge appointments. This inoperability means even if China wins the case, it may not see any tangible relief.
Meanwhile, the U.S. Postal Service (USPS) reversed an earlier suspension of parcels from China and Hong Kong, resuming package acceptance on Wednesday. The temporary ban had threatened to disrupt millions of daily shipments.
Reactions from Global Trade and Logistics Sectors
Industry stakeholders have voiced concerns over the sudden trade policy shifts. Martin Palmer, co-founder of cross-border e-commerce data provider Hurricane Commerce, described the situation as chaotic:
“We’re all running around like headless chickens, trying to second-guess what’s going to happen. In two weeks’ time, we may be back to normal.”
The Trump administration justifies the de minimis exemption’s closure as a necessary step to curb fentanyl trafficking into the U.S. Recent investigations by Reuters also revealed that drug traffickers have exploited the loophole to import precursor chemicals undetected.
USPS, in a statement, assured customers that it is working with CBP to streamline an efficient tariff collection mechanism, aiming to minimize delivery disruptions.
No Trump-Xi talks scheduled amid escalating trade war
Despite the rising tensions, no communication has been scheduled between President Trump and Chinese President Xi Jinping regarding the new tariffs or Beijing’s retaliatory measures.
Trump, speaking on Tuesday, indicated he was in no hurry for discussions with Xi as the new tariffs took effect at midnight Eastern Time.
In response to Trump’s trade actions, China has imposed targeted tariffs on U.S. coal, liquefied natural gas, crude oil, and farm equipment. Additionally, Beijing has launched an anti-monopoly investigation into Alphabet’s Google, signaling broader retaliatory measures.
Tariff Uncertainty and Economic Concerns
The abrupt trade restrictions have left the retail and shipping sectors unprepared. Maureen Cori, co-founder of New York-based consultancy Supply Chain Compliance, expressed frustration over the lack of government guidance:
“There has been absolutely zero time for anyone to prepare for this. We need direction on how to handle this without warning or notice.”
Previously, de minimis shipments were consolidated to expedite customs clearance, processing hundreds or thousands of shipments at once. With the new policy, each package now requires individual clearance, significantly increasing the workload for postal services, brokers, and customs agents.
The exemption was originally introduced to facilitate trade, but its usage has surged with the rise of online shopping. In 2024, approximately 1.36 billion shipments entered the U.S. through the de minimis provision, marking a 36% increase from 2023, according to CBP data.
Economic and Policy Repercussions
U.S. Treasury Secretary Scott Bessent defended Trump’s tariff strategy in his first media interview since taking office, asserting that the policy aims to restore domestic manufacturing and reverse industry migration from the U.S.
Meanwhile, Federal Reserve officials are closely monitoring the economic impact of the tariffs. Chicago Fed President Austan Goolsbee cautioned against underestimating their inflationary consequences, while Richmond Fed President Thomas Barkin noted that it remains too early to determine how cost increases will be absorbed or passed on to consumers.
As trade tensions between the U.S. and China escalate, businesses and policymakers await further clarity on how the evolving tariff landscape will reshape global commerce in the months ahead.
