How the US stamped out Chinese shipping shenanigans

On February 4, U.S. consumers waiting for packages from China received bad news from the U.S. Postal Service. The USPS temporarily stopped accepting inbound parcels from China, only to reverse the decision hours later. However, new tariffs are on the way — even for the smallest online orders.

At least Americans can take comfort knowing that, no matter how high these tariffs rise or when they actually take effect, they can rely on fair global shipping prices that reflect economic realities. Thanks to tough negotiations with the taxpayer-funded Universal Postal Union in 2019, Americans no longer need to cover the cost of below-market Chinese postal rates imposed by a global bureaucracy.

International postage must reflect delivery costs — not bungled bureaucratic tinkering.

Unfortunately, the UPU still aims to reimpose lopsided shipping rates that favor "transitioning" countries over first-world nations like the U.S. The Trump administration must keep a close watch on global postal bureaucrats.

For the average consumer (and many experts), the international shipping system can seem hopelessly confusing. Postal agencies from different countries must agree on who pays what when mail originates in one country and is sent to another. Under the “terminal dues” system established by the UPU, the postal agency of the country of origin must compensate the destination country’s postal service for delivering the mail. As the U.S. Postal Service explains, “Each postal administration that receives mail from another administration has the right to collect payment from the originating post to cover the costs incurred to deliver that mail.”

That system could work if postal agencies compensated other mail services fairly based on delivery costs. But in 1999, the UPU implemented a “terminal dues” system that set rates based on a country’s economic status rather than actual delivery costs. Under this system, nations classified as being in economic “transition,” such as China, paid lower fees to wealthier “target” countries like the United States.

As a result, the USPS — and by extension, American taxpayers and consumers — absorbed the cost when China underpaid for mail shipments to the U.S. A 2015 Inspector General report estimated that this China-first system cost the USPS about $75 million per year. Additionally, the USPS had to pay China Post substantial fees to deliver American packages within China, making it far cheaper for China to export products than for Americans to sell goods to Chinese consumers. As Linn’s Stamp News noted, “Shipping a 1-pound parcel to New York City from Greenville, S.C., would cost almost $6 via the United States Postal Service, but only $3.66 from Beijing to New York.”

This dynamic changed during the first Trump administration when President Trump threatened to withdraw from the UPU unless it created fairer terms for American businesses and the USPS. In response, the UPU convened an “Extraordinary Congress” in 2019 to discuss potential reforms. The outcome benefited American taxpayers and consumers. In exchange for the U.S. remaining in the UPU and contributing $40 million over five years, the UPU allowed member countries to set their own international postage rates. As a result, Americans no longer had to subsidize Chinese shipments and could demand reimbursements that reflected actual delivery costs.

The results have been largely positive so far. A 2024 analysis by the Government Accountability Office found that for the first time in a long time, USPS’ international mail revenue is covering inbound delivery costs.

But there are signs of trouble brewing. The UPU is still trying hard to “reduce inequalities” and tackle poverty, unusual goals for a global postal organization. The only real lever the UPU has to address these issues is using the “terminal dues” system to subsidize supposedly poor nations. And that tinkering is what led to so much trouble in the first place.

President Trump must keep close watch on the UPU to ensure that it does not go back to its old, nefarious ways. International postage must reflect delivery costs — not bungled bureaucratic tinkering.