After electric vehicles, the European Union is ready to take action against Chinese e-commerce companies.

The report states that the European Union is formulating plans to impose tariffs on cheap goods purchased from Chinese online retailers such as Temu and Shein. This move aims to curb the surge of substandard goods from China, as claimed by the European Union.

According to insiders, the European Commission will recommend lifting the current tax-free purchase threshold for goods below 150 euros later this month. According to current EU regulations, packages purchased online from non EU countries with a value below 150 euros are not subject to customs duties. An official stated that the proposal mainly targets Chinese e-commerce platforms Temu and AliExpress, as well as clothing retailer Shein.

In addition, Chinese merchants also benefit from the postage subsidy policy. For Chinese merchants, even sending cheap goods by air is cost-effective.

In addition to lifting the tax-free purchase threshold for goods below 150 euros, the EU is also considering another possible measure, which is to mandate large platforms to register online value-added tax payments, regardless of their value. Starting from 2021, packages sent to EU companies are subject to value-added tax regardless of their value, but are exempt from customs duties.

These plans will be proposed before the establishment of the new committee, which will take office later this year.

One of the main reasons why the European Union wants to reduce the influx of a large number of cheap goods into European countries is that its customs are a bit overwhelmed.

According to data from the European Commission, the EU imported 2.3 billion items below the tax-free threshold of 150 euros last year. The European Commission stated that the enormous amount of e-commerce is testing the limits of customs. The committee also stated that under the import tax exemption policy, many sellers will split their goods into smaller value goods and send them to the European Union. According to statistics, up to 65% of packages are undervalued to enjoy tax breaks.

The main retail association in Germany, the German Chamber of Commerce (HDE), has been lobbying the German government, stating that tariff exemptions have led to a significant increase in the number of small packages entering the EU from online platforms such as Shein and Temu, and that customs authorities lack the ability to check whether all products comply with EU regulations.

An EU official stated that the committee proposed to lift tariff thresholds last year, but may now seek to accelerate implementation to cope with the surge in cheap imported goods. However, some officials have also warned that obtaining approval from EU countries may be difficult as the new system will increase the workload of already overwhelmed customs officials.

In addition, with the surge in cheap imported goods, the number of goods that do not meet EU standards is also increasing.

It is understood that from 2022 to 2023, the number of dangerous products reported by EU countries increased by more than 50%, reaching over 3400. Among them, cosmetics, toys, appliances, and clothing are the products with the most safety issues.

The EU toy industry accuses Chinese retailers of shipping dangerous toys to Europe. The industry organization Toy Industries of Europe stated in February that they purchased 19 toys from Temu and found that none of them met EU standards, with 18 of them posing actual safety risks to children.

Temu responded by saying, "Our EU website will no longer provide a list of these 19 products.". The company also added, "Product safety is our top concern, and we have strengthened monitoring of such products and their related requirements."

However, Christel Delberghe, Director General of the retail lobbying group Euro Commerce, said, "We hope to provide an EU level competitive environment for all participants targeting EU consumers in the online retail sector, regardless of where they are established." She said that existing legislation is sufficient, but "effective and efficient cross-border enforcement strategies" are needed.

Temu stated that its growth does not rely on cheap goods, and "as long as policies are fair, we will accept and support any policy adjustments made by legislators that are in the interest of consumers."

AliExpress stated that it is "collaborating with legislators" to "ensure that we comply with the regulations of the EU market in the past, present, and future."

Shein claimed that the company will "fully support" efforts to reform tariffs.