( NewsNation ) — President Donald Trump is closing a trade loophole that lets discount stores such as Shein and Temu dodge tariffs on inexpensive products from China.
Trump signed an executive order Wednesday to end the so-called “de minimis” exemption on merchandise from China and Hong Kong. The rule allowed companies to avoid import taxes and certain customs paperwork on packages worth $800 or less.
This choice might result in increased expenses for customers shopping at discount platforms such as Shein and Temu—both of which have utilized this exception to offer extremely low-priced items and swiftly grow their presence in the U.S. market.
Beginning May 2nd, low-value goods coming from China will be subject to a tariff set at either 30% of their worth or $25 for each item. as stated in a fact sheet from the White House The monetary value will rise to $50 following June 1st.
As online shopping and direct-to-consumer sales have grown, so too has the utilization of the de minimis exemption. In the past year, approximately 1.4 billion deliveries came into the U.S. via the duty-free channel, which is over twice as many as the 636 million documented in 2020. based on information from U.S. Customs and Border Protection .
Lawmakers on both sides of the political spectrum In recent years, they have advocated for updating the de minimis provision, expressing concerns that this exemption facilitates the smuggling of narcotics into the nation.
Over 90% of all packages entering the U.S. currently arrive through de minimis, with approximately 60% originating from China. according to Reuters .
Why is Trump terminating the exception?
The White House states that shutting down the trade loophole is essential for combating the influx of lethal substances such as fentanyl originating from China.
This occurs because imports entering the country via the de minimis exemption usually undergo lesser scrutiny and oversight compared to bigger shipments.
"President Trump is addressing misleading shipping tactics employed by Chinese-based shippers who often conceal illegal items, such as synthetic opioids, within small parcels to take advantage of the de minimis exemption," according to a statement from the White House.
On a typical day, CBP handles more than 4 million low-value shipments entering the U.S.—a massive amount being exploited by criminals for smuggling illicit narcotics. agency has warned .
The Biden administration also took steps To plug the gap, they suggested altering regulations with a specific focus on inexpensive products originating from China. At that moment, Democratic representatives employed a comparable rationale.
"The significant rise in de minimis shipments has made it progressively harder to identify and prevent illicit or hazardous deliveries entering the U.S. via this channel," said Daleep Singh, who serves as the deputy national security adviser to President Biden. said back in September .
Following the failure of the House to introduce legislation aimed at reducing the de minimis exemption, Democratic lawmakers called on Biden to utilize his executive power to modify the regulation.
The National Council of Textile Organizations, which represents American manufacturing firms, commended President Trump for his efforts. move Thursday , describing it as "well past due."
Will the items from Temu and Shein cost more?
Eliminating the de minimis threshold for products coming from China might significantly affect discount platforms such as Shein and Temu, which are renowned for offering extremely low-cost apparel, household items, and various other goods.
A 2023 report According to findings from the House Select Committee on China’s Communist Party, Shein and Temu account for over 30% of daily shipments arriving in the U.S. via the de minimis exception.
Under the revised rules, consumers can still purchase items from Shein and Temu, though these products might come with higher prices.
The Cato Institute, which has a lean towards libertarian ideology, argues that Ending the exemption will "result in significantly adverse impacts for Americans, especially those with lower incomes."
The think tank cited research papers demonstrating that the lowest-income ZIP codes in the U.S. get more minor-value deliveries, especially from China, than the highest-income ZIP codes do.
Additionally, one must account for administrative expenses. In February, Trump briefly eliminated the duty-free status for inexpensive Chinese imports; however, he changed his stance when shipments began accumulating at U.S. borders.
The National Foreign Trade Council, which includes members such as FedEx, UPS, and DHL along with retailers like Amazon and Walmart, has defended the exemption And stated that limiting it would lead to higher taxes for American families. The council claims that decreasing the de minimis threshold would double the cost of a $50 package.
A further issue is that stores might determine flying inexpensive items to the U.S. is not financially viable and opt for shipping containers instead, resulting in extended delivery periods.
Temu and Shein did not reply to NewsNation’s queries regarding how customers in the U.S. might be impacted by the alteration in policy.
In recent years, both firms have implemented strategies to expand their presence within the U.S., potentially mitigating the impact of any challenges they face.
Recently, Temu has begun directing customers toward "local" merchandise—products that can be delivered from fulfillment centers within the U.S. CNBC reported The business news source mentioned that Shein established distribution facilities in states such as Illinois and California in 2022, along with setting up a supply chain center in Seattle during the previous year.
Will tiny international parcels also face impacts?
The modification of the de minimis rule currently affects only inexpensive items originating from China and Hong Kong. This implies that products with values up to $800 from nations such as Canada or Mexico may still be imported into the U.S. without duties.
Nevertheless, shipments originating from elsewhere globally might lose their exemption shortly. A different executive order Issued on Wednesday stated that the de minimis exemption will be eliminated as soon as a mechanism for "swiftly processing and collecting" the tariffs is established.
Research has found Eliminating this provision entirely could lead to expenses between $11 billion and $13 billion for U.S. consumers, with an outsized negative impact on low-income and minority families.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This content must not be republished, rebroadcast, rewritten, or distributed without permission.To get the most recent updates on news, weather, sports, and live videos, visit Yourbasin.