Countries attending the Universal Postal Union’s (UPU) Extraordinary Congress this week have reached an agreement on international remuneration rates for incoming mail. This sets the rates that postal carriers such as the USPS in the US can charge countries (such as China) to deliver their US bound mail and will impact Chinese seller imports into the US.
Whatever you think of President Trump, and there’s plenty there to discuss even before the impeachment news, this is a President who sets extraordinary goals and amazingly seems to achieve them. Trump looked at Chinese sellers and the volumes they’re shipping to the US paying just pennies for the USPS to deliver them and effectively said enough’s enough, they’re not paying enough. On the 17th of October the US sent notice of withdrawing from the UPU with the rider that if changes were made they would cancel the withdrawal. The threat of withdrawing from the UPU was enough to cause the UPU to take action.
What will happen now is that countries who import more than 75,000 tons of mail (based on 2018 data) would be able to opt-in to self-declare their rates as of the 1st of July 2020. 75,000 metric tons means largely the US and self declared rates means Trump achieves his goal and from summer next year can jack up what are known as terminal rates for Chinese sellers flooding the US with cheap imports. This only applies to packets under 4.4 pounds (2kg) but that does of course cover the majority of online purchases for many sellers.
At the same time the new agreement protects US sellers for their cross border sales in ways that simply withdrawing from the UPU wouldn’t do – US sellers also have their packages delivered by foreign postal carriers and the UPU regulates terminal rates for them.
The net result of this will be higher postal prices for Chinese sellers who ship to the US and in turn they are likely to have to increase their selling prices. Many Chinese sellers work on razor thing margins of just pennies so can’t simply absorb increased postage costs. The US hope is that consumers will start to shop from US retailers rather than Chinese sellers.
This will of course lead to Chinese sellers re-evaluating their business models and many will start to locate goods within the US or ship them over in bulk daily to cut costs. However then they will be paying the USPS prices on parity with domestic sellers which does, at least to President Trump, seem fair.