President Donald Trump has reversed his decision to eliminate the “de minimis” loophole that allowed packages from China valued at under $800 to be processed without customs duties or tariffs. This component of the 10% tariff on Chinese imports, which took effect Tuesday, threatened discount Chinese retailers Temu and Shein. Trump signed an executive order that would allow the low-value products from China to continue coming into the U.S. without additional charges.
However, the de minimis exemption will again be eliminated once the U.S. commerce secretary establishes a system to “fully and expediently process and collect tariff revenue.”
This change has caused confusion among e-commerce retailers, shipping companies, and Customs and Border Protection, leading the U.S. Postal Service to briefly suspend acceptance of packages from China. The de minimis exemption has fueled explosive growth in the U.S. among discount Chinese online retailers, including Temu and Shein. The elimination of the de minimis loophole, combined with the 10% tariff on Chinese goods, threatens to increase prices for these retailers and lead to shipping delays as packages would now be required to go through Customs and Border Protection.
A provision of the Tariff Act of 1930, the de minimis rule was originally implemented to allow American tourists to send back goods they bought overseas tax-free. Congress increased the minimum value on packages subject to de minimis from $200 to $800 in 2016, leading to an influx of duty-free parcels. Some of the largest beneficiaries of the rule are Shein and Temu, which ship numerous inexpensive goods into the United States.
Tariff impact on Chinese e-commerce
Temu has started directing U.S. users toward goods shipped from American warehouses rather than Chinese-based sellers. Analysts say Temu’s shift toward sellers with U.S. warehouses—and more expensive goods like furniture—has made it less sensitive to the de minimis exemption.
Meanwhile, Shein still relies largely on direct shipping and specializes in fast fashion, so an end to the de minimis rule could hurt it. Both the Biden and Trump administrations have expressed concerns that fentanyl could be entering the U.S. through de minimis packages and have lamented the loss in potential tariff revenue. The Biden administration issued a last-minute rule change last month that would deny the exemption to packages under $800 subject to certain sections of the Tariff Act of 1930.
Some believe Temu’s reliance on the de minimis provision makes it harder to check whether it’s complying with federal rules, including those on Chinese goods made with Uyghur forced labor. Trump’s 10% tariffs on Chinese goods took effect Tuesday, while 25% tariffs on Canadian and Mexican imports were delayed for a month as the Trump administration negotiates new border controls with their governments. China has said it plans to retaliate with a 15% tariff on U.S. coal and natural gas imports, plus a 10% tariff on crude oil, agricultural machinery, large cars, and pickup trucks.
Trump on Friday also hinted at further announcements next week, potentially matching tariffs imposed by other countries on U.S. imports, though he did not specify which countries he would target. This decision by President Trump has significant implications for the U.S. e-commerce landscape, particularly for discount retailers like Shein and Temu, as it reshapes the way low-value goods from China are handled at U.S. borders.
