End of De Minimis Tax Loophole Slashes US Air Cargo Demand from Asia

Impact of De Minimis Tax Loophole Closure

• 📉 The closure of the US de minimis tax loophole, which allowed packages under $800 to enter tax-free, has significantly impacted global air cargo business.
• 💡 This loophole had previously fueled the growth of online retailers such as Shein and Temu.

Declining Air Cargo Demand

• 📊 Figures from the International Air Transport Association show a 10.7% drop in air cargo demand from Asia to the US in May following the loophole's closure.
• 📦 The volume of low-value e-commerce shipments experienced a particularly steep fall, down 43% according to industry consultancy Aven.
• 🌍 In contrast, demand for shipments to other unaffected markets like Europe and Southeast Asia saw an increase.

New Tariffs and Future Uncertainty

• 📈 Packages from China to the US initially faced tariffs of up to 145%, later reduced to around 30% after a deal between Beijing and Washington.
• ❓ Aven suggests it is unclear whether demand will recover with these new tariffs, which are a substantial increase from the previous zero-duty system.
• 🔑 Low-value shipments had become a significant portion of air cargo demand between China and the US, accounting for over half of air freight last year.

Business Repercussions

• 📉 FedEx experienced a stock price decline after withholding its full-year outlook due to uncertainty surrounding US trade policies.
• 🚚 FedEx has been a major logistics provider for e-commerce giants like Temu and Shein.