The European Commission is drawing up plans to impose customs duties on cheap goods from Chinese online retailers, including Temu and Shein Group, to address a surge in substandard items entering the EU.
According to a report from The Financial Times, the bloc aims to scrap the current €150 duty-free threshold later this month.
Earlier this week, J Sainsbury PLC (LSE:SBRY) boss Simon Roberts joined a growing list of business leaders calling for the closure of a similar tax loophole in the UK that specifically benefits foreign e-commerce retailers.
Billions of cheaply made items are imported into the EU every year below the duty-free threshold.
Non-profit organisation, Toy Industries of Europe, warned in February that Temu is importing unsafe toys that are non-compliant with EU safety standards.
Unlike US-based Amazon, Shein, Temu and other cheap online retailers ship directly to customers rather than in bulk to storage facilities. This allows them to skirt costly customs bills.
According to the FT report, the EU is mulling scrapping the €150 duty-free threshold entirely, affecting any online retailer shipping to EU customers directly from outside the bloc.
Shein, which is weighing up a blockbuster initial public offering on the London Stock Exchange, said it was “fully supportive” of customs duty reforms.