The postal loophole can be seen in the shipping options offered by Chinese eBay sellers and others on major e-commerce portals.
On Thursday, hundreds of eBay sellers from China advertised women's workout leggings, including ones for little as 76 cents that could be purchased instantly. The seller, China-based Webstainless, has racked up more than 21,680 positive reviews from buyers in the last 12 months, according to the e-commerce site. Webstainless offers free shipping to the US
On AliExpress, Internet giant Alibaba's e-commerce portal for international buyers, shipping is free if a pair of US$10.29 yoga pants are transported via ePacket, the name of the subsidized service by the US Postal Service. Other shipping options from companies like FedEx, United Parcel Service Inc. or DHL Worldwide Express range from US$40 to US$60, raising the cost of the cheap pants so much that a buyer might as well get them from a store or seller in the US
Trump's directive to eliminate the postal discounts could potentially raise costs for Alibaba Group Holding, while helping FedEx and other international shipping companies.
Any changes to international postal rates potentially disrupts cross-border e-commerce, the sale of goods from a retailer in one country directly to consumers in another. That business, enabled by platforms such as Amazon, eBay and Alibaba, is expected to reach US$1 trillion by 2020.
Representatives for Alibaba didn't respond to requests for comment. Alibaba rival JD.com Inc.'s logistics arm said it was looking into the potential impact. Amazon and eBay, through spokespeople, said they were reviewing Trump's memo and declined to immediately comment.
The shipping rate under the postal treaty can be a fraction of what it costs to send the same item from the US to China -- making returns very difficult -- and it can be lower than what it costs to ship an identical product within the US
Amazon's prices illustrate the gap: standard shipping for an iPhone case from China to a New York address is US$4.99, while from a seller based in the US is US$5.99. The difference may not seem like a lot, but added up over millions of low-cost consumer items, its effect has been a disadvantage for American retailers on e-commerce portals.
"American sellers simply cannot compete," said Huang, who's also founder of consultancy 80/20 Sourcing. "It seems like Trump wants to level the playing field and one outcome is that American consumers will have less access to that really cheap stuff."
The subsidized ePacket service limits packages to 2 kilograms (4.4 pounds) and less than US$400 value. Chinese sellers estimate shipping through the services take 10 to 20 days from China to the US
American companies have cheered Trump's plan to withdraw. "This outdated arrangement contributes significantly to the flood of counterfeit goods and dangerous drugs that enter the country from China," Jay Timmons, the president of the National Association of Manufacturers, said in a statement.
UPS, which along with other private couriers stands to gain if the subsidized service is removed, said that withdrawal was "the right step."
Under the treaty's framework it takes a year for a country to withdraw, during which rates can be renegotiated.
"It's been an unbalanced deal," said McDavid Stoddard, a director at Beyond, a shopping app that connects foreign brands to Chinese consumers. "The U.S. Postal Service has been complaining about this for a while and we've always doubted the long-term viability of this channel."
