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How Trump’s Closing a Tariff Loophole Will Hurt UPS and FedEx

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How Trump’s Closing a Tariff Loophole Will Hurt UPS and FedEx

Less than a year ago, executives from FedEx and UPS were talking about how they were handling a flood of packages from China to American consumers.

“Explosive” is how Carol Tomé, UPS’s chief executive, in July described the volume of shipments from e-commerce companies selling Chinese goods in the United States. And FedEx’s chief customer officer, Brie Carere, said about those companies in June, “No one carrier can serve their entire needs.”

But that torrent is expected to slow to a trickle after President Trump on Friday closed a loophole that had allowed cheap goods from China to enter the United States without paying tariffs.

The business of transporting hundreds of millions of low-value shipments on as many as 60 freighter flights a day between China and the United States could now wither.

A falloff in such shipments could deprive companies like UPS, FedEx and DHL of a big source of revenue. Airlines, mainly those that carry only cargo, and smaller logistics companies could also suffer. Passenger airlines may also be hurt somewhat because they carry some of those packages, too.

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UPS said last week that it expected the revenue from shipping packages from China to the United States — its most profitable trade lane — to decline roughly 25 percent in the second quarter of this year, from a year earlier. UPS also announced that it would cut 20,000 jobs this year as part of a long-term plan to reduce costs, and said “macroeconomic uncertainty” prevented it from updating its forecasts for revenue and profits for 2025.

Ms. Tomé said UPS’s China-to-U.S. business was responsible for 11 percent of the company’s international revenue. She suggested that the company could take the trade tensions in stride, saying that, when trade between China and the United States declined during Mr. Trump’s first term, it increased between China and rest of the world.

But because Mr. Trump is now waging a more aggressive and broader trade war, logistics companies may not be able to easily make up for lost sales in other places, as they were able to during his first term, analysts said.

“It was a bit of a bumpy ride the last time,” said Jay Cushing, an analyst for Gimme Credit. “It took a little while for things to level out, but this is probably going to take even longer.”

The tariffs that Mr. Trump imposed on Chinese goods during his first term helped set off the gusher of inexpensive goods from China.

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To avoid those tariffs, Chinese sellers increasingly sent products to the United States under the loophole that was closed on Friday for imports from mainland China and Hong Kong.

Known as the de minimis exemption, the loophole allowed buyers to import goods worth $800 or less without paying tariffs or filling out detailed customs paperwork. Now that the exemption is gone, American shoppers will have to pay tariffs of as much as 145 percent on Chinese goods, adding $14.50 to the cost of a $10 T-shirt.

Temu, one of the biggest e-commerce companies selling Chinese goods, said last week that it was no longer shipping orders from China directly to American consumers. “All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country,” Temu said in a statement.

As the ending of the exemption loomed, Wall Street analysts pressed delivery companies to predict the impact.

When asked on an investor call in March what share of revenue came from de minimis shipments, FedEx’s chief executive, Raj Subramaniam, said it was a “minority.”

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Isabel Rollison, a FedEx spokeswoman, declined to offer a more precise estimate. “In terms of our revenue split by geography, we serve an extremely diversified customer base across more than 220 countries and territories,” she said in a statement.

DHL, based in Bonn, Germany, also declined to say to say what percentage of its business came from de minimis shipments from China. Glennah Ivey-Walker, a DHL spokeswoman, said they represented “only a small portion of our overall U.S.-bound volume and our overall business volume in the U.S. market.”

Ending the exemption might have been worse for the carriers had it not been for a late change to the rules by the Trump administration.

The lower-value goods were set to become subject to strict customs rules that require detailed paperwork. But the administration late last month issued a waiver that allowed the goods to be treated more leniently.

Some trade experts said the administration’s change undermined tariff collection because it deprived Customs and Border Protection of information it needed to make sure that importers were paying the correct amount of import duties.

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“If you don’t know exactly what the good is, it’s hard to know what the right potential value is or what the right tariff should be,” said Lori Wallach, director of a trade program at American Economic Liberties Project, an organization that seeks to curb the power of large corporations.

But some customs lawyers said that, even after the waiver, detailed information would still be required.

The waiver came after DHL stopped making some shipments that were subject to the paperwork requirement, and after it had spoken to members of the Trump administration.

Ms. Ivey-Walker, the DHL spokeswoman, said the waiver would not “make it harder to collect tariffs or in any way impede the government’s ongoing efforts to protect its borders.” She added that DHL had spoken to the administration to highlight the delays that might occur if the detailed paperwork requirement was enforced.

A sharp decline in low-value shipments could also shake airlines.

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Air cargo shipments had already slowed even before the end of the exemption on Friday.

By mid-April, air cargo traffic from mainland China and Hong Kong to the United States was down about 16 percent from a year earlier, according to WorldACD, an industry data firm. And experts say that traffic is likely to slow further in the coming weeks.

“We expect to see as much as 30 to 40 percent of China-to-U.S. capacity come out of the market,” said Derek Lossing, the founder of Cirrus Global Advisors, an e-commerce and supply chain consulting firm.

The carriers most active in e-commerce trade between China and the United States include two U.S. cargo airline companies, Atlas Air Worldwide and Kalitta Air; Hong Kong’s Cathay Pacific Airways; and the cargo divisions of Chinese airlines, according to several air cargo experts.

U.S. passenger airlines are not as vulnerable because they operate relatively few flights between the United States and mainland China and Hong Kong.

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To make up for the losses, Chinese businesses may try to sell more goods to customers elsewhere, including in Europe, Australia, New Zealand and Latin America, experts said.

There are already signs of such a shift. While air cargo shipments from China to the United States were down in the weeks leading up to the expiration of the exemption, flights into Miami, a hub for flights to Latin America, were up slightly, according to Mr. Lossing.

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Instagram boss defends app from witness stand in trial over alleged harms to kids

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Instagram boss defends app from witness stand in trial over alleged harms to kids

A Los Angeles County Superior Court judge threatened to throw grieving mothers out of court Wednesday if they couldn’t stop crying during testimony from Instagram boss Adam Mosseri, who took the stand to defend his company’s app against allegations the product is harmful to children.

The social media addiction case is considered a bellwether that could shape the fate of thousands of other pending lawsuits, transforming the legal landscape for some of the world’s most powerful companies.

For many in the gallery, it was a chance to sit face to face with a man they hold responsible for their children’s deaths. Bereaved parents waited outside the Spring Street courthouse overnight in the rain for a place in the gallery, some breaking into sobs as he spoke.

“I can’t do this,” wept mom Lori Schott, whose daughter Annalee died by suicide after a years-long struggle with what she described as social media addiction. “I’m shaking, I couldn’t stop. It just destroyed her.”

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Judge Carolyn B. Kuhl warned she would boot the moms if they could not contain their weeping.

“If there’s a violation of that order from me, I will remove you from the court,” the judge said.

Mosseri, by contrast, appeared cool and collected on the stand, wearing thick wire-framed glasses and a navy suit.

“It’s not good for the company over the long run to make decisions that profit us but are poor for people’s well-being,” he said during a combative exchange with attorney Mark Lanier, who represents the young woman at the center of the closely watched trial. “That’s eventually going to be very problematic for the company.”

Lanier’s client, a Chico, Calif., woman referred to as Kaley G.M., said she became addicted to social media as a grade-schooler, and charges that YouTube and Instagram were designed to hook young users and keep them trapped on the platforms. Two other defendants, TikTok and Snap, settled out of court.

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Attorneys for the tech titans hit back, saying in opening statements Monday and Tuesday that Kaley’s troubled home life and her fractious relationship with her family were to blame for her suffering, not the platforms.

They also sought to discredit social media addiction as a concept, while trying to cast doubt on Kaley’s claim to the diagnosis.

“I think it’s important to differentiate between clinical addiction and problematic use,” Mosseri said Wednesday. “Sometimes we use addiction to refer to things more casually.”

On Wednesday, Meta attorney Phyllis Jones asked Mosseri directly whether Instagram targeted teenagers for profit.

“We make less money from teens than from any other demographic on the app,” Mosseri said. “We make much more the older you get.”

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Meta Chief Executive Mark Zuckerberg is expected to take the witness stand next week.

Kaley’s suit is being tried as a test case for a much larger group of actions in California state court. A similar — and similarly massive — set of federal suits are proceeding in parallel through California’s Northern District.

Mosseri’s appearance in Los Angeles on Wednesday follows a stinging legal blow in San Francisco earlier this week, where U.S. District Judge Yvonne Gonzalez Rogers blocked a plea by the tech giants to avoid their first trial there.

That trial — another bellwether involving a suit by Breathitt County School District in Kentucky — is now set to begin in San Francisco in June, after the judge denied companies’ motion for summary judgment. Defendants in both sets of suits have said the actions should be thrown out under a powerful 1996 law called Section 230 that shields internet publishers from liability for user content.

On Wednesday morning, Lanier hammered Mosseri over the controversial beauty filters that debuted on Instagram’s Stories function in 2019, showing an email chain in which Mosseri appeared to resist a ban on filters that mimicked plastic surgery.

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Such filters have been linked by some research to the deepening mental health crisis in girls and young women, whose suicide rates have surged in recent years.

They have also been shown to drive eating disorders — by far the deadliest psychiatric illnesses — in teens. Those disorders continue to overwhelm providers years after other pandemic-era mental health crises have ebbed.

Earlier research linking social media and harms to young women was referenced in the November 2019 email chain reviewed in court Wednesday, in which one Instagram executive noted the filters “live on Instagram” and were “primarily used by teen girls.”

“There’s always a trade-off between safety and speech,” Mosseri said of the filters. “We’re trying to be as safe as possible but also censor as little as possible.”

The company briefly banned effects that “cannot be mimicked by makeup” and then walked the decision back amid fears Instagram would lose market share to less scrupulous actors.

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“Mark [Zuckerberg] decided that the right balance was to focus on not allowing filters that promoted plastic surgery, but not those that did not,” Mosseri said. “I was never worried about this affecting our stock price.”

For Schott, seeing those decisions unfold almost a year to the day before her daughter’s death was too much to bear.

“They made that decision and they made that decision and they made that decision again — and my daughter’s dead in 2020,” she said. “How much more could that match? Timeline, days, decisions? Bam, she was dead.”

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Meta, TikTok and others agree to teen safety ratings

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Meta, TikTok and others agree to teen safety ratings

Meta, TikTok and Snap will be rated on their teen safety efforts amid rising concern about whether the world’s largest social media platforms are doing enough to protect the mental health of young people.

The Mental Health Coalition, a collective of organizations focused on destigmatizing mental health issues, said Tuesday that it is launching standards and a new rating system for online platforms. For the Safe Online Standards (S.O.S.) program, an independent panel of global experts will evaluate companies on parameters including safety rules, design, moderation and mental health resources.

TikTok, Snap and Meta — the parent company of Facebook and Instagram — will be the first companies to be graded. Discord, YouTube, Pinterest, Roblox and Twitch have also agreed to participate, the coalition said in a news release.

“These standards provide the public with a meaningful way to evaluate platform protections and hold companies accountable — and we look forward to more tech companies signing up for the assessments,” Antigone Davis, vice president and global head of safety at Meta, said in a statement.

TikTok and Snap executives also expressed their commitment to online safety.

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Parents, lawmakers and advocacy groups have criticized online platforms for years over whether they’re protecting the safety of billions of users. Despite having rules around what content users aren’t allowed to post, they’ve grappled with moderating harmful content about self-harm, eating disorders, drugs and more.

Meanwhile, technology continues to play a bigger role in people’s lives.

The rise of artificial intelligence-powered chatbots has heightened mental health concerns as some teens are turning to technology for companionship. Companies have also faced a flurry of lawsuits over online safety.

This week, a highly watched trial over whether tech companies such as Instagram and YouTube can be held liable for allegedly promoting a harmful product and addicting users to their platforms kicked off in Los Angeles.

TikTok and Snap, the parent company of disappearing-messages app Snapchat, settled for undisclosed sums to avoid the trial.

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In opening statements, one of the lawyers representing the California woman who alleges she became addicted to YouTube and Instagram as a child said the products were designed to be addictive.

Tech companies have denied the allegations made in the lawsuit and say internal documents are being twisted to portray them as villainous when there are other factors, such as childhood trauma, leading to the mental health issues of some of their users.

Meta Chief Executive Mark Zuckerberg is expected to testify at the Los Angeles trial. Another trial over a lawsuit that alleges Meta failed to protect children from sexual exploitation and violated New Mexico’s consumer protection laws also kicked off this week.

The new ratings were also announced on Tuesday on Safer Internet Day, a global campaign that promotes using technology responsibly, especially among young people. Companies on Tuesday, such as Google, outlined some of the work they’ve done around safety, including parental controls to set time limits for scrolling through short videos.

The ratings will be color-coded, and companies that perform well on the tests will get a blue shield badge that signals they help reduce harmful content on the platform and their rules are clear. Those that fall short will receive a red rating, indicating they’re not reliably blocking harmful content or lack proper rules. Ratings in other colors indicate whether the platforms have partial protection or whether their evaluations haven’t been completed yet.

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“By creating a shared framework for accountability, S.O.S. helps move us toward online spaces that better support mental health and well-being,” Kenneth Cole, the fashion designer who founded the Mental Health Coalition, said in a statement.

A website for S.O.S. states that technology companies didn’t influence the development of the new standards and they aren’t funding the project. The Mental Health Coalition, though, has teamed up with Meta in the past on other initiatives. Meta and Google are also listed as “creative partners” on the coalition’s website.

The coalition, which is based in New York, didn’t immediately respond to an email asking about its funding.

Companies have published their online rules and data on content moderation. Those that are interested in participating in the project voluntarily hand over documents on policies, tools and product features.

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MLB to begin streaming in-market games for Angels, Dodgers, Padres and other teams

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MLB to begin streaming in-market games for Angels, Dodgers, Padres and other teams

Major League Baseball is making streaming options available for fans to watch in-market games of 20 teams, including the Dodgers, Los Angeles Angels, San Francisco Giants and San Diego Padres — a significant shift to respond to the fast-changing TV landscape.

The Angels on Tuesday announced its arrangement with the league to make its games more widely available. The club said the option — Angels.TV — would be available for purchase for $99.99 for the full season or $19.99 per month through the MLB app.

“We are excited to partner with Major League Baseball to bring Angels games to their streaming platform,” Angels President John Carpino said in a statement. “Our priority is making it as easy as possible for fans to watch Angels Baseball and MLB’s industry-leading app provides another great option to stay connected to the team.”

The league separately announced the move, which provides options for fans of other teams, through its MLB app. In-market games for the Arizona Diamondbacks, Baltimore Orioles, Cincinnati Reds, Cleveland Guardians, Colorado Rockies, Kansas City Royals, Miami Marlins, Milwaukee Brewers, Minnesota Twins, New York Mets, Philadelphia Phillies, St. Louis Cardinals, Seattle Mariners, Tampa Bay Rays and Washington Nationals will be provided through the app.

Games will still be available to traditional pay-TV subscribers.

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Spectrum, owned by cable giant Charter Communications, which distributes the Dodgers’ SportsNet LA, had previously made available Dodger games as a streaming option through a separate app.

On Tuesday, ESPN announced that it would become the new streaming home of MLB.TV, bringing out-of-market live games to the ESPN App and ESPN.com.

“With MLB.TV now available through ESPN, we’re taking a significant step forward in reinforcing ESPN as the home of the MLB regular season while deepening the value proposition of the ESPN Unlimited plan — giving fans even more flexibility in how and where they watch all season long,” Rosalyn Durant, executive vice president, ESPN Programming & Acquisitions, said in a statement.

The move comes as traditional regional sports networks struggle amid the exodus of pay-TV customers. Regional sports networks once were viewed as cash cows for teams and TV programming companies that owned them, but, in recent years, at least one regional sports network owner has filed for bankruptcy. That prompted the MLB to step in to fill the gap.

The league said it also was taking over the television production of games for 14 teams, including the Padres and Arizona Diamondbacks.

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