2025 was a challenging year for cross-border e-commerce platforms and merchants. On the one hand, the end of the US “small-value exemption” policy and the finalization of the EU’s fixed tariffs marked the end of the “low-price direct mail + tax-free” model that had long supported overseas trade. On the other hand, tax compliance was tightened across the board, and cross-border e-commerce revenue, which had previously been in a gray area, was now subject to comprehensive regulation.
In 2025, cross-border merchants lived under the shadow of tariff pressure. In February, the US imposed a 10% tariff on Chinese goods, citing the “fentanyl issue,” which subsequently triggered several months of tariff negotiations between the two countries. In August, the US officially suspended tax-free treatment for parcels valued at $800 or less entering the US, ending the “low-price direct mail + tax-free” model. A 3C seller with eight years of experience on Amazon’s US platform stated that the new tariff policy has increased tariff costs by approximately 25%. For a typical computer keyboard, tariffs alone add about $20 to the hard cost, almost erasing the product’s price advantage. More and more merchants are seeking alternative markets. This seller shifted their focus to the European market, finding that European consumers have high demand for high-quality 3C products, price competition is not fierce, and current sales growth in Europe is healthy, with an average monthly sales growth rate exceeding 25%, and average profit margins are also rising.
In 2025, after the US abolished the “small parcel exemption” policy, the volume of small parcels flowing to the EU surged, exceeding the total level of 2024, while the volume of parcels flowing to the US declined significantly. Customs data shows that in 2024, China’s low-price e-commerce exports to the EU amounted to $19.1 billion, and exports to the US amounted to $23.1 billion; from January to September 2025, exports to the EU reached $20.5 billion, exceeding the total for the previous year, while exports to the US were only $13.1 billion. However, the European market is not a safe haven either. In December, the European Council passed a resolution imposing a fixed tariff of €3 per parcel on small packages valued at less than €150, effective July 1, 2026. This marks the simultaneous end of the “tax-free era” for major global cross-border markets. Policy changes have led to the dissolution of established cross-border companies such as Xunda Electric and Yongsheng Electric, and the exit of logistics platforms and small and medium-sized sellers from the market.
If tariffs increase costs, then compliance is directly raising the industry’s entry barriers. In 2025, the State Taxation Administration will implement new regulations requiring all domestic and foreign internet platforms serving Chinese businesses to submit seller identity and transaction data to the tax authorities quarterly. Amazon has been submitting core data on Chinese sellers quarterly since October, covering 22 major global sites. From the first reporting period in November, Amazon sellers are required to file taxes legally; gray-area operations are no longer feasible. Cross-border e-commerce has officially entered an era of full compliance.
In 2025, although the “Four Little Dragons” of cross-border e-commerce faced multiple challenges, they still achieved significant overall growth, with two companies’ GMV approaching $100 billion for the first time. TikTok Shop had 400 million active consumers, and its platform GMV approached $100 billion, ranking fifth and fastest-growing among major overseas e-commerce platforms, only behind Amazon, Walmart, Shopee, and eBay. Driven by Black Friday, its fourth-quarter GMV exceeded $25 billion, surpassing eBay; its December single-month GMV in overseas markets surpassed Shopee.
Temu’s full-year GMV for 2025 is projected to be between $90 billion and $95 billion. It has topped the global e-commerce download and monthly active user growth charts for the past three years, with cumulative downloads exceeding 1.2 billion as of October. In August, its global monthly active user base reached a record high of 530 million. However, TikTok Shop’s increased investment in live-streaming e-commerce has had limited effect; live-streaming sales have never accounted for 30% of total sales, while short-video revenue has steadily increased, now accounting for two-thirds of TikTok Shop’s revenue.
Overall, the four major cross-border e-commerce giants exhibit two common trends. First, Europe has become a new growth engine. Influenced by US tariff policies, these four companies have collectively increased their investment in the European market. Temu’s monthly active users in the EU exceeded 140 million in the first half of the year, a surge of 74% year-on-year. In the third quarter, the European market contributed 40% of its global GMV, surpassing the US. SHEIN is also shifting its focus to Europe, and its revenue in Europe is expected to exceed that in the US for the first time in 2026. Secondly, branding has become a consensus. TikTok Shop is projected to be the third fastest-growing brand in the US by 2025, attracting well-known brands such as Disney and Samsung. The number of major brands joining in the first half of 2025 increased by 95% year-on-year. AliExpress launched its Super Brand Program, introduced the Brand+ channel, and engaged in price wars. SHEIN opened its first permanent global store in Paris, aiming to enhance its brand image.
Looking back at 2025, China’s cross-border e-commerce is navigating the challenges of policy, cost, and market restructuring. The low-price-driven model is no longer viable; branding, refinement, and diversified market strategies have become the new standard. Simultaneously, AI brings new opportunities and challenges to cross-border e-commerce. OpenAI launched instant checkout, and ChatGPT may reshape the rules of the e-commerce game. In the future, cross-border e-commerce will fully enter an era of digitalization, branding, and AI, and Chinese cross-border e-commerce platforms will face even fiercer competition from international giants.
