25 countries suspend sending packages to the US; Trump will impose tariffs on furniture; EU defends digital tax

Abstract

The US small-value package tariff exemption is entering its countdown. According to United Nations statistics, 25 countries have already announced the suspension of sending packages to the United States; and before this, Trump announced on Truth Social that he might impose tariffs on furniture entering the United States, the answer will be in the next 50 days; the EU and the US go back and forth, resolutely defending the digital tax.

The following is this week's tariff news.

US Small-Value Package Tariff Exemption Countdown

US President Trump announced on July 30 that starting from August 29, the duty-free treatment for imported packages valued at $800 and below will be suspended. At that time, small-value packages will need to pay all applicable taxes and fees.

According to statistics from the United Nations' Universal Postal Union on the 26th, currently 25 of its members have announced the suspension of sending packages to the United States.

On the 26th local time, according to official news from Russian Post, due to issues with tariff amounts, the acceptance of mail services for goods sent to the United States will be suspended starting from August 26. Regular letter mail service is not affected.

In addition, postal agencies from European countries such as Australia, South Korea, France, Germany, Italy, Spain, Portugal, Austria, Belgium, Sweden, Switzerland, Denmark, as well as countries like India, Japan, Thailand, and Singapore have successively announced in recent days the suspension of sending packages to the United States.

Analysis believes that the expiration of the small-value package tariff exemption will cause US consumers to suffer a major blow; the tariffs will be passed on to US consumers. In addition, cross-border e-commerce enterprises, logistics companies, etc., will also be hit.

Trump Will Impose Tariffs on Furniture?

On August 22, US Eastern Time, Trump announced on Truth Social that the Trump administration will launch an investigation into imported furniture. In the next 50 days, this investigation will be completed, and furniture entering the United States from other countries will be subject to tariffs, with the rate to be determined.

This move aims to revitalize the furniture business in the states of North Carolina, South Carolina, Michigan, and throughout the federation.

After Trump's post, the stocks of some furniture and home goods companies, including Wayfair, RH, and Williams-Sonoma, plummeted after the market closed.

CNBC's Jim Cramer told investors on Tuesday that he believes domestic furniture production has largely become a thing of the past, although President Donald Trump continues his efforts to get companies to manufacture in the United States.

But for Cramer, it is unlikely that these states will become furniture production centers again, because the United States has favored cheaper imported supply chains for many years. Moreover, they have difficulty finding skilled labor capable of producing high-quality products.

He stated that American workers who make furniture "just moved on to other things, or they retired," and tariffs are not enough to bring them back. He said that this system is a "globalization bargain," where the United States sacrificed domestic job opportunities in exchange for cheap goods.

Trump Threatens to Raise Tariffs Again with Rare Earth Magnets?

Trump told reporters on Monday after meeting with South Korean President Lee Jae-myung at the White House: China must ensure the supply of rare earth magnets to the United States, or it will face a 200% tariff. He also stated that aircraft components are a key bargaining chip for Washington to counter Beijing's control over rare earths.

On August 26, Foreign Ministry spokesperson Guo Jiakun hosted a regular press conference. Answering a question from a DPA reporter, he stated that the Chinese side has clarified its position on the tariff issue many times.

"He is bluffing. He always talks big on tariffs or potential punishments, but we shouldn't get caught up in these remarks," said Henry Wang, founder and president of a Beijing think tank.

According to the latest government data, at the time of Trump's statement, China's rare earth magnet exports had returned to the level before Beijing implemented export restrictions in April. Magnets shipped to the United States in June surged more than sevenfold, or 660%, compared to the previous month, and sales in July increased by 76% month-on-month.

China dominates the production of rare earth magnets, controlling about 90% of the global supply, and maintains similar control over the refining of minerals used to make rare earth magnets.

Trump Wields the Tariff Stick, EU Defends Digital Tax

The Digital Services Tax is a new type of proportional tax levied on digital services provided by digital enterprises, which refers to a country's government taxing the income generated by digital services such as search engines and online advertising provided by digital enterprises.

For a long time, the US government has expressed opposition to the issue of the digital services tax, because the performance of America's tech giant companies—including Google's parent company Alphabet, Meta, Apple, and Amazon—are deeply affected by this tax.

On August 25, Trump threatened on social media, "If countries that impose a digital tax do not cancel the relevant legislation, we will impose a large amount of additional tariffs on the country's products exported to the United States, and implement export restrictions on our highly protected technology and chips."

In April of this year, the European Commission determined that the American company Apple and the metaverse platform company violated the EU's "Digital Markets Act," and imposed fines of 500 million euros and 200 million euros on the two companies, respectively.

On August 26, the EU countered US President Trump's claims about unfair overseas digital regulation, and stated that "the EU and its member states have the sovereign right to formulate rules for economic activities on their own territory."

The latest disagreement comes as the EU is preparing to announce legislation this week to formalize the details of a joint trade framework reached with the United States, which would eliminate tariffs on certain US exports. Before this, the United States will not reduce the 27.5% tariff on EU cars and auto parts to the previously agreed 15%.

Regarding subsequent tariff developments, we will continue to pay attention.