By Anne d’Hynenzio and Didi Tang
Notifications to customers attracted by the low-cost products of Chinese shopping apps: The era of getting fewer trendy clothing, tools and gag gifts than lunch delivered to your door in 10 days is probably numbered.
President Donald Trump has ended the little-known but widely used exemptions, most of which allow as many as 4 million low-value zones born from China to arrive in the United States every day.
The executive order signed by the president on Wednesday eliminates “minimum provisions” for goods from China and Hong Kong on May 2. This has helped e-commerce companies such as Shein and Temu, which have been established by China, thrived while cutting down the US retail market, with tax exemptions, which apply to packages under $800, to help e-commerce companies such as Shein and Temu thrive.
“Shoppers had a set of product and timing options,” said former Cohen Mar, chief retail advisor at market research firm Circana. “Now they’ll have limited options and timing. So you can still buy this product, but you may have to wait three or four weeks.”
American politicians, law enforcement and business groups have described long-standing policies as trade omissions that give benefits to cheap Chinese products and serve as a portal for the poor to enter the country with illegal drugs.
The cleaning fee announced by Trump on Wednesday aims to end tax-free exceptions for all imports under $800, but only if the US government has personnel from all countries to handle the plots.
What is the impact on price and shipping times?
According to the White House fact sheet, small packages of Chinese products sent via the international postal network are subject to a mandatory rate of 30% of their value or $25 per item.
According to the White House, commercial personnel such as FedEx and UPS will need to report shipment details and send appropriate obligations to US Customs and Border Protection. After Trump’s latest tariffs, the tariff rate for Chinese products will be at least 54%.
Advocates of the De Minimis exception claim that the exclusion will reduce costs and hurt low-income consumers and small businesses.
Tariff costs threaten to hit the US operations of companies like Shein and Temu, which has rapidly expanded in the US using De Minimis’ regulations to provide ultra-stable first fashion items from China.
However, it is unclear how tax-free losses will affect two online retailers, as well as American companies such as Amazon and Walmart, which include two online retailers and virtual marketplaces where international sellers offer products.
Shein and Temu have already built warehouses in the US, so they were able to get orders from American shoppers more quickly. Shein recently opened a fulfillment and logistics hub in the Seattle area. Neither company could be reached for comment Thursday.
Ram Ben Tzion, CEO of Digital Vetting Platform Publishan, said he expects the company to “hopefully be forced to rethink its business strategy and perhaps explore opting from the US market.”
In an emailed statement to the AP, FedEx said it will help customers adapt to new regulatory requirements, saying it is important to “complete the documents correctly before pickup” to ensure shippers move smoothly.
Hilton Beckham, deputy commissioner for the U.S. Customs and Border Protection, said federal agencies are ready to implement the latest tariffs.
“Our automated systems have been fully updated to capture, assess and manage all new obligations, and provide clear guidance to support unified enforcement across the country,” Beckham said.
Publican’s Ben Tzion said the US government is ready to process a huge number of low-value cargo starting next month.
The Hong Kong government said that Hong Kong’s post office will “temporarily maintain” postal services to the United States until May 2, but “will not collect so-called tariffs on behalf of US authorities.”
What are the rules of De Minimis?
Introduced in 1938, the DE Minimis exception is intended to promote the flow of small packages under $5, equivalent to about $109 today. The threshold increased to $200 in 1994 and to $800 in 2016. However, the rapid rise in cross-border e-commerce pushed by China challenges the intent of customs exception rules decades ago.
China’s low-value package exports surged in 2023 from $5.3 billion in 2018 to $66 billion, according to a February report from Congressional Research Services. And the US market was a major destination.
The Chinese government, which views cross-border e-commerce as an important part of foreign trade, has introduced favorable policies, including financial support and infrastructure construction, to promote its growth.
Former President Joe Biden last year proposed a rule that stated that foreign companies cannot avoid tariffs simply by delivering goods they claim to be worth less than $800. Trump attempted to end the exception in February, but his first order was stopped within days when the US seemed unprepared to process and collect tariffs on millions of plots.
Rep. Rosa L. Delauro, a Connecticut Democrat, said he was pleased that Trump took a second move to remove the rules.
“For too long, this habit loophole has helped foreign exporters flood our market with cheap goods and drug traffickers move fentanyl through our borders.
Cheap products explosion
For the first time in 2023, this package was delivered through US customs, with over 1 billion of this package, up from 134 million in 2015. By the end of last year, customs and border protection said it was handling around 4 million small cargoes per day.
The popularity of Shein and Temu’s popularity and growing popularity has narrowed down first fashion retailers like Forever 21 and H&M. Forever 21 filed for bankruptcy last month and denounced the tax exemption for its decision to close U.S. stores.
“We were able to take advantage of de Minimis exemptions to undercut brands in terms of pricing and margins given our competition from foreign first fashion companies, and we were unable to find a sustainable path,” Brad Sel said in a statement.
Meanwhile, Amazon launched a low-cost online storefront last year featuring electronics, apparel and other products in a clear effort to compete with Temu and Shein. Amazon has shipped products from warehouses operated in China to US customers, according to documents provided to sellers.
Original issue: April 3, 2025, 7:44pm EDT
