Alibaba, PDD Holdings shares drop after US Postal Service suspends shipments from China, Hong Kong

US-listed shares of Chinese e-commerce companies Alibaba and PDD Holdings, which owns fast fashion brand Temu, saw a decline in premarket trading on February 5 after the United States Postal Service (USPS) announced an indefinite suspension of inbound parcels from mainland China and Hong Kong.

Alibaba dropped by 2.4%, while PDD fell by 6%, according to Barron’s

The USPS did not cite any reason for the temporary suspension. The halt followed US President Donald Trump's decision to do away with the so-called “de minimis” exemption for low-value packages.

Under the exemption, shipments worth less than $800 were allowed to enter the country duty-free. The provision was used heavily by Temu and Shein, another Chinese fast fashion brand, to deliver low-cost items to customers in the US.


Also Read : Donald Trump says US will ‘take over’ Gaza and ‘own it’: What does it mean?

US-China trade war

The two brands, in fact, built their business models around the exception. The halt also came just days after the Trump administration introduced an additional sweeping levy of 10 per cent on goods imported from China.

Beijing, seeking to retaliate against the new US tariffs, announced a range of economic measures of its own.

Starting February 10, China is set to tax certain types of coal and liquefied natural gas from the US at 15 per cent. Among others, a 10% tariff on crude oil and certain types of vehicles will also be levied by the Chinese.

Mexico and Canada spared?

Trump had also announced a levy of 25 per cent on imports from Mexico and Canada. The move was, however, suspended for 30 days following high-level discussions.

Trump has also hinted at introducing such instruments of protectionism against the European Union (EU). "They don't take our cars, they don't take our farm products, they take almost nothing and we take everything from them. Millions of cars, tremendous amounts of food and farm products," the US President was quoted as saying by the BBC on Monday.

Also Read : New Albany shooting: 1 dead, 5 injured, police identify one suspect

FAQs

1. What is 'de minimis'?
The “de minimis” exemption allowed for the duty-free entry of low-value packages to the US. Under the exemption, shipments worth less than USD 800 were allowed to enter the without any duties.

2. What other exemptions were allowed?
'De minimis' also allowed for entry of eligible packages without any inspections.