( NewsNation ) — President Donald Trump is closing a trade loophole that enables discount stores such as Shein and Temu to bypass 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 purchasing from discount platforms such as Shein and Temu—platforms that have utilized this exception to offer extremely low-priced items and swiftly grow their presence in the American market.
Beginning May 2nd, low-cost items coming from China will be subject to taxes at a rate of either 30% of their worth or $25 for each product. as per a fact sheet from the White House The monetary value will be raised to $50 starting from June 2nd.
As online shopping and direct-to-consumer sales have increased, so too has the utilization of the de minimis exemption. In the previous year, approximately 1.4 billion packages arrived in the U.S. via the duty-free channel, which is over twice as many as the 636 million documented in 2020. as per the 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 drug smuggling into the nation.
Over 90% of all packages entering the U.S. currently arrive through de minimis provisions, with approximately 60% originating from China. according to Reuters .
Why is Trump terminating the waiver?
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 due to the fact that imports entering the country via the de minimis exception usually undergo lesser scrutiny and oversight compared to bigger consignments.
"The White House stated that President Trump is addressing misleading shipping tactics employed by Chinese-based companies. These entities often conceal illegal materials, such as synthetic opioids, within small shipments to take advantage of the de minimis exemption," they explained.
On a typical day, CBP handles more than 4 million low-value shipments entering the U.S.—a massive amount that criminals are taking advantage of to smuggle illicit drugs. agency has warned .
The Biden administration also took steps To address the issue, they suggested amending regulations with a specific focus on inexpensive products imported from China. At that time, Democratic representatives employed a comparable rationale for their proposal.
"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 advisor to President Biden. said back in September .
Following the House's inability to pass legislation aimed at reducing the de minimis exemption, Democratic legislators proceeded with their efforts. called on Biden to utilize his presidential powers to modify the regulation.
The National Council of Textile Organizations, which represents American manufacturing companies as an industry group, commended President Trump for his efforts. move Thursday , describing it as "well past due."
Will the prices of Temu and Shein items increase?
Ending the de minimis exemption on goods from China could have a major impact on bargain sites like Shein and Temu, known for their ultra-low prices on clothes, home goods and other items.
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 threshold exception.
Under the revised rules, consumers can continue purchasing items from Shein and Temu; however, these products might come with higher price tags.
The Cato Institute, which has a lean towards libertarianism, argues that terminating the exemption will "result in significantly adverse impacts for Americans, especially those with lower incomes."
The think tank cited research papers indicating that the most impoverished ZIP codes in the U.S. get a higher volume of de minimis shipments, especially from China, when contrasted with the wealthiest ZIP codes.
In addition, one must account for administrative expenses. Earlier this year, in February, Trump briefly eliminated the duty-free status for inexpensive goods coming from China; however, he changed his stance when shipments began accumulating at U.S. Customs offices.
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 mentioned that limiting it would lead to higher taxes for American households. The council stated that decreasing the de minimis threshold would double the cost of a $50 package.
A further issue is that stores might determine continuing air shipments of inexpensive items to the U.S. is not financially viable and opt for transporting them via container ships, which would result in extended shipping durations.
Temu and Shein did not reply to NewsNation’s queries regarding how customers in the U.S. might be impacted by the modification of this 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.
Temu has lately begun directing customers toward "domestic" goods—products that can be dispatched from fulfillment centers within the U.S. CNBC reported The business news source mentioned that Shein established distribution centers in states such as Illinois and California in 2022, along with setting up a supply chain hub in Seattle previously year.
Will smaller parcels sent from different nations be impacted?
The modification of the de minimis rule currently affects only inexpensive products originating from China and Hong Kong. This implies that items with values up to $800 from nations such as Canada or Mexico may still be imported into the U.S. without duties.
Nevertheless, parcels coming from the rest of the globe might lose their exemption shortly. Another distinct point to consider is: 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 Completely removing this provision could lead to expenses between $11 billion and $13 billion for U.S. consumers, with low-income and minority families being affected more severely.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This content must not be published, broadcast, rewritten, or distributed.To stay updated with the newest information, weather reports, sporting events, and live videos, visit WDTN.com.