Trump and Temu – war of glass beads

Ten years ago, I saw dropshippers for the first time at an IT conference. They didn't seem like people who really belonged in that world, they looked hipster and cool. A good connoisseur of that world, and of those people, explained to me that they make pretty good money selling Chinese products mostly to the American market, adding their own cool flavor to the process. At that time, Americans were not happy to buy directly from the Chinese because they doubted the quality of the product, but they willingly ordered the same from dropshippers because it seemed more convincing and safer. The result was the same, a Chinese company would send a package to an American address, only a good part of the profit would go to the account of some talented and creative guy or girl in Serbia. The business especially came to life after 2016, when the so-called de minimis, that is, the value of a package that someone in the US could receive duty-free and tax-free increased from $200 to $800 per package, per day.

De minimis was introduced in 1938 and then it was worth 5 dollars, in order to reach the aforementioned 800. The term itself represents something that should not be confused. In recent years, Americans have overcome their misgivings about ordering directly from China, so Temu and Shein have become the most popular online shopping sites there. In two years, the number of shipments increased six times, and imports to as much as 66 billion dollars, which is a large amount, but it is still a drop in the sea of ​​American imports, which amount to about three thousand billion dollars annually. However, for small and medium-sized enterprises, de minimis is of great importance because thanks to it, they were able to purchase raw materials and even finished products at incredibly low prices, only on the condition that they do not exceed the limit of 800 dollars and only one package per day. Until Donald Trump entered the scene again.

Trump put an end to that practice by practically abolishing de minimis, that is, by introducing a tariff on everything coming from China, regardless of value. Not only is everything more expensive by at least ten percent, which is a value that could be compensated, but the import procedure itself is more complicated and represents an additional cost that makes receiving small shipments from China less profitable.

The idea of ​​de minimis was precisely that the shipment up to that value travels quickly and without major control, provided that there are no prohibited products in it. Small and medium-sized enterprises mostly imported small things for production, Temu was especially interesting to fashion designers who could buy bags of colorful beads and hairpins for a few dollars to decorate the clothes and haberdashery they created. Over time, many have found ways to break larger purchases into packages of up to 800 dollars by importing the entire container of such "shipments" first to Mexico or Canada, and from there, slowly, day by day.

There is no alternative they can turn to. If it stays as Trump, many of them will have to change jobs, which will lead to a serious crisis for a good part of American micro, small and medium enterprises. Serbian dropshippers will also be affected, but we won't hear much about their plight since they were very discreet while making good money.

China does not have the best answer to these measures, because lowering the price and subsidizing will not change anything, the most terrible thing is not that what yesterday cost a dollar will now cost two, but that the recipient of the package will have to "cima", which is a serious logistical problem in business and a step back in business. Like if someone did away with scanning the price at the register and started pasting and typing them in by hand again. Everything is still possible, it's just slower and more expensive. Smor. And that's your worst rating in the digital world.