One minute at midnight on Friday, Eastern Time was a U.S. tariff exemption that fueled the rise of companies like Shein and Temu, and provided cheap fast fashion and other household items to millions of Americans’ closets, and closed. As part of tariffs on China by U.S. President Donald Trump, the U.S. is closing a vulnerability that allows low-value goods to be shipped to the U.S. without paying any import fees. Trump said Wednesday that the "de minimis" vulnerability is known for the Latin word "is important" and it is a "big scam against our country." “We ended it.”
"De Minimis" refers to a trade policy introduced in the 1930s that allowed travelers returning to the United States to bring goods to them at a value of up to $5 without the need to declare customs. Since 2016, the threshold is $800 (£600).
The term “minimis” may mean “very few”, but the policy is responsible for a large number of consumer goods. According to U.S. Customs Corporation, about 1.36 billion goods entered the U.S. through loopholes in fiscal year 2024, more than double the amount four years ago. This represents over 90% of all goods entering the United States. About 60% of these packages come from China.
As of Friday, parcels worth less than $800 will pay a 120% levy or a $100 fixed fee, rising to $200 from June. This is part of the broader part of the U.S.-China trade war, which is the tariffs on all Chinese imports already on all Chinese imports.
The White House accused Chinese sellers of exploiting loopholes in "deceptive modes of transportation". Industry associations in the United States complain about unfair competition among Chinese sellers and have been working to close the loopholes for years.
Trump also argued that the free flow of small packages into the United States has allowed deadly drugs, especially fentanyl and the chemicals used to make it, to enter the country without restrictions. "These exports play a major role in the synthetic opioid crisis in the United States," Trump said in an executive order in April.
Prices may rise. Cheap retailers like Shein and Temu have reportedly started to raise prices for certain items. Data compiled by Bloomberg found that over the past week, the average price of the top 100 products sold by Shein in the beauty and health category increased by 51%, while a set of 10-piece kitchen towels rose by 377%. The average increase in women's clothing was 8%.
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A Temu spokesman said the company has recently transitioned to a local fulfillment model, meaning that all U.S. sales are handled by sellers within the U.S. "Despite changes in operations, Temu's pricing for U.S. consumers has not changed," the company said.
The White House said the U.S. Customs Agency arrested more than 21,000 pounds of fentanyl at the border in the last fiscal year, enough to kill 4 billion people. Hopefully, the addition of checks to small packages will allow more illegal imports to be arrested.
Before 2020, the year when China cracked fentanyl suppliers, 90% of the fentanyl consumed in the United States came directly from China. Now, almost all supply comes from the U.S.-Mexico border, rather than packages shipped directly from China.
The Chinese government and trade association said that U.S. consumers, not Chinese export chambers, are suffering. The Commerce Department spokesman Yongqian said earlier this year that U.S. tariff hiking “will undoubtedly increase costs for U.S. consumers and reduce their shopping experience.”
According to Chinese state media, industry groups, including the China Textile Association, support the government's position and accused the United States of "hegemony action."
Shein is reportedly considering suspending its widely expected London IPO due to uncertainty over how tariffs will affect its business. The company did not respond to a request for comment.
JD.com, one of China's e-commerce companies, promises to buy 20 billion yuan (£206.6 million) worth of products from Chinese exporters to sell in the domestic market.