Trump Reinstates ‘De Minimis’ Tariff Exemption For Shipments Under $800—Boosting Shein And Temu

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President Donald Trump on Friday 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, a component of the 10% tariff on Chinese imports that took effect Tuesday—a move that threatened discount Chinese retailers Temu and Shein.

Key Facts

Trump signed an executive order that would allow the low-value products from China to continue coming into the U.S. without additional charges.

The de minimis exemption will again be eliminated after the U.S. commerce secretary establishes a system to “fully and expediently process and collect tariff revenue.”

The change prompted 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, which are responsible for an estimated 30% of de minimis U.S. imports, according to a 2023 report from the House Select Committee on the Chinese Communist Party.

The elimination of the de minimis loophole, plus the 10% tariff on Chinese goods, threatens to increase prices for the two retailers, among others, and lead to shipping delays as the packages would now be required to go through Customs and Border Protection.

What Is The De Minimis Rule, And Why Does It Matter For Temu And Shein?

A provision of the Tariff Act of 1930, it was originally implemented to allow American tourists to send back goods they bought overseas tax-free, according to The New York Times. Congress increased the minimum value on packages subject to de minimis from $200 to $800 in 2016, leading to an explosive influx of duty-free parcels. Some of the largest beneficiaries of the rule are Shein and Temu, which ship scores of inexpensive goods into the United States. The House committee report argues Temu’s business model “relies on the de minimis provision.” However, CNBC reports Temu has started directing U.S. users toward goods shipped from American warehouses rather than Chinese-based sellers. Analysts quoted by Reuters 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 reportedly still relies largely on direct shipping and specializes in fast fashion, meaning an end to the de minimis rule—which makes direct shipping from China both cheaper and faster—could hurt it.

Why Is De Minimis Controversial—including For Shein And Temu?

Both the Biden and Trump administrations have expressed concerns that fentanyl could be coming in 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 Section 201, Section 232 or Section 301 of the Tariff Act of 1930. The House committee report also claims Temu’s reliance on the de minimis provision makes it harder to check whether it’s complying with federal rules, including a ban on Chinese goods made with Uyghur forced labor.

How Many De Minimis Packages Enter The U.s. Each Year?

More than 80% of all U.S. e-commerce shipments were subject to de minimis in 2022, according to a congressional research report.

Key Background

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 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 said he would announce reciprocal tariffs next week, which would allow the U.S. to match tariffs imposed by other countries on U.S. imports, though he did not say which countries he would target.

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