Trade Tensions Escalate Between Europe and China Over E-Commerce and Tariffs

Trade tensions between Europe and China are intensifying, with the European Union (EU) implementing new tariffs on Chinese imports. Following the imposition of customs duties on Chinese electric vehicles in July, Brussels announced on August 14 that it would tax biodiesel imports from China. These measures primarily target industrial companies subsidized by Beijing, but they also signal a broader regulatory approach that could impact major Chinese online retailers, particularly Shein, a fast-fashion giant. Shein has been characterized as a success story, leveraging globalization and technological innovation to expand its market reach. However, critics argue that the company exploits loopholes in international trade regulations to undermine Western competitors. One significant loophole is the UN's Universal Postal Union (UPU), which offers discounted shipping rates for developing countries, allowing Chinese sellers to ship goods to Europe at lower costs than domestic shipments. Despite the U.S. successfully negotiating tariff autonomy in 2019, EU member states have yet to follow suit. Additionally, the European customs code exempts low-value packages from tariffs, a policy that has benefited Chinese platforms like Shein, Temu, and AliExpress during the pandemic. With Shein reporting profits of $2 billion in 2023, the EU has estimated a loss of €1.5 billion in customs revenue. In response, the European Parliament has proposed eliminating this exemption, while concerns about labor practices and sourcing from regions linked to forced labor further complicate Shein's business model.