CITIC Securities: "Reciprocal Tariff" adjustment releases short-term relief for cross-border sellers, but medium- to long-term game risks remain

According to the Zhitong Finance APP, CITIC Securities released a research report stating that on May 2, the United States officially canceled the tariff exemption for cross-border small packages. On May 12, the U.S. and China issued a joint statement that within 90 days, the U.S. would adjust the 125% tariff rate imposed on China since April 2 back to 10% (the total increased tariff rate since 2025 would be adjusted from 145% to 30%). The rapid changes in tariff policy are driving the evolution of the industry ecosystem. CITIC Securities believes that the cessation of the small package tax exemption policy may accelerate the concentration of the industry ecosystem towards semi-managed/3P models. The suspension of "reciprocal tariffs" significantly alleviates the short-term operational pressure on cross-border sellers who previously relied on the general import model. However, in the medium to long term, risks related to tariff policy still exist under the backdrop of Sino-U.S. competition, and cross-border sellers mainly respond through three strategies: price increases, capacity transfer, and diversified layouts. Considering that the cancellation of the reciprocal tariffs is stronger than expected, it brings significant benefits to both cross-border platforms and sellers.

CITIC Securities' main points are as follows:

Policy tightening accelerates industry reshuffling, ending the small package tax exemption dividend.

On May 2, the U.S. officially canceled the cross-border small package tariff exemption policy, which has a direct impact on cross-border e-commerce companies that rely on this model. Previously, the small package tax exemption dividend drove rapid expansion of platforms like Temu and Shein (the CAGR of tax-exempt packages from 2020 to 2024 reached 20.9%), while under the new policy, international postal packages face a 30% ad valorem tax or a fixed fee of $25 per item, forcing platforms to accelerate model innovation. The evolution from fully managed models to semi-managed emphasizes overseas warehouse layout and localized operational capabilities, leading to the accelerated exit of small and medium-sized factory-type sellers and an increase in industry concentration.

The strength of the cancellation of reciprocal tariffs exceeds expectations, benefiting the performance of cross-border sellers and providing a longer strategic adjustment period.

On May 12, the U.S. and China issued a joint statement that within 90 days, the U.S. would adjust the 125% tariff rate imposed on China since April 2 back to 10%. We estimate that the additional cost rate faced by cross-border sellers (assuming declared goods value accounts for 30% of the terminal selling price) will decrease from approximately 37.5 percentage points to 3 percentage points, significantly alleviating short-term performance pressure. However, considering that subsequent changes in tariffs remain unclear and that long-term policy risks still exist under the backdrop of Sino-U.S. competition, we believe that the greater value of this tariff adjustment lies in providing cross-border sellers with a longer strategic adjustment period.

Three core strategies for cross-border sellers: terminal price increases, capacity transfer, and diversified layouts.

In response to the impact of the new U.S. tariff policy, cross-border e-commerce companies are actively responding through three main strategies: price adjustments, supply chain restructuring, and global layout, creating new opportunities amid structural differentiation.

Strategy One: Price increases to pass on cost pressures, with strong brand momentum enterprises at an advantage. Considering the important position of Chinese supply, we believe sellers have the ability to collectively raise prices to transfer tariff costs, with sellers possessing strong brand momentum having greater bargaining power. For example, in the scenario of a 30% additional tariff, if only through price increases, a terminal price increase of about 6% would be sufficient to offset the impact of the increased tariffs.

Strategy Two: Capacity transfer to reduce tariff sensitivity, combined with price increases for greater efficiency. Sellers with independent design and capacity organization capabilities can build a tariff firewall through capacity transfer Countermeasure 3: Diversified layout to reduce reliance on a single market. We believe that trade risks will persist in the long term against the backdrop of Sino-U.S. competition, and multi-regional layout will become a long-term trend for cross-border e-commerce. The core of the platform model migration lies in the connection with local logistics partners; Amazon sellers can leverage FBA's global logistics infrastructure for rapid expansion, with the main barrier being the understanding of consumer demand and trends in new regions.

Risk Factors:

Risks of changes in Sino-U.S. tariff policies, risks of competition in the cross-border e-commerce market exceeding expectations, risks of international logistics costs rising beyond expectations, risks of overseas demand being weaker than expected, risks of related enterprises' capacity transfer progress falling short of expectations, risks of significant exchange rate fluctuations.

Investment Strategy:

Based on our analysis, 1) the cancellation of tariff exemptions for cross-border small packages, while impacting the full-service model, has led platforms like Temu to accelerate their transition to a semi-managed model since the first half of 2024; 2) considering the scale of Sino-U.S. trade and the recent easing of Trump's statements, the final tariff rate imposed by the U.S. on China is expected to remain at current levels. Maintain the industry rating of "outperforming the market."