My understanding is that there's a nominal fee for last-mile delivery the USPS charges mail from other countries, which is all (or the vast majority) that's being charged for Chinese shipments, as the Chinese side is subsidized completely (or almost so) for outgoing mail. I think the $2 you are quoting might be the treaty fee for delivering mail from other countries, which is not the true cost of delivery, but mostly works out as long as there's a fairly even flow of mail between two countries. What we have here is that China is subsidizing their side of the outgoing mail, so all that's being paid is the treaty set delivery fee for external mail (which again, isn't the true cost of last-mile delivery).
the treaty fee [...] is not the true cost of
delivery, but mostly works out as long as there's
a fairly even flow of mail between two countries.
Isn't the core problem here that there _isn't_ an even flow of mail between China and the US? Because there's far more ebay/aliexpress traffic coming out of China than going in.
I think it's not just that, which would be problematic on it's own, it's that China is also subsidizing local delivery, so the only (or almost only) delivery fee for Chinese shippers is the portion they pay to USPS for local delivery, which is artificially very low. So not only are they taking advantage of the difference in trade flows, they are also encouraging it even more.
I think this was covered in an Planet money podcast from NPR.[1] It's also possible I'm not remembering portions of it correctly, but I think they did an interesting treatment of the subject.
The US rates are for small flat rate packages and envelopes on USPS.com. I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote. I may have misinterpreted, or converted using outdated exchange rates, or missed details about minimum quantities. As you say, there is subsidization involved, but I think this is about right for the amount charged to the shipper.
> I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote.
Oh, I'm not questioning your accuracy, I was just wondering the source, since I wasn't finding anything easily. :)
I don't think this is the end of direct shipping from China, but it is a large blow to that random super cheap Chinese knock-offs market. The Planet Money episode I linked in a sibling comment covers the story of an American (unspillable) mug maker that noticed knock-offs selling super cheap from China. He was able to order one with free shipping for $5.59, free shipping from China. He asked his shipping department how much it would cost to mail the mug across the street, and was told $6.30, just for shipping. I think that illustrates the distortion this has on the market very clearly, where something can be manufactured in China and shipped to a US home cheaper than a US manufacturer can just ship the item.
I'm sure there are plenty of items with a higher base cost where Chinese manufacturers will be able to make up that shipping extra in a lower item cost, but given how large the market of very cheap directly shipped items is, I think this will have a very large effect, especially since I think there's a lot more consumer confidence ordering very cheap things from China than somewhat expensive things. I don't care too much if my $10 item from China is crap, or unsuitable for it's intended use, or just fake, but I might really care if it's a $50 item, so I might choose a North American company to order from.
My understanding is that there's a nominal fee for last-mile delivery the USPS charges mail from other countries, which is all (or the vast majority) that's being charged for Chinese shipments, as the Chinese side is subsidized completely (or almost so) for outgoing mail. I think the $2 you are quoting might be the treaty fee for delivering mail from other countries, which is not the true cost of delivery, but mostly works out as long as there's a fairly even flow of mail between two countries. What we have here is that China is subsidizing their side of the outgoing mail, so all that's being paid is the treaty set delivery fee for external mail (which again, isn't the true cost of last-mile delivery).