Pricing for Shein and Temu could face increased intensity due to the implementation of the new de minimis rule.
President Donald Trump's decision to suspend the global de minimis exemption is set to significantly alter the e-commerce landscape, subjecting low-value international shipments to full duties[1][2]. This move affects packages previously duty-free under $800, with tariffs ranging from $80 to $200 per item depending on the product origin and shipping method[1][2].
For Chinese e-commerce retailers such as Shein and Temu, which have relied heavily on the de minimis rule to ship millions of small parcels duty-free into the U.S., this change represents a major disruption[4]. Companies like Temu have begun stockpiling inventory in U.S. warehouses to minimise shipping delays and manage cost increases[4].
The repeal of the de minimis exemption is expected to impact American consumers, particularly lower-income shoppers who frequently buy affordable goods from Chinese platforms[4]. The suspension is predicted to increase costs of imported goods broadly due to the new tariffs levied on millions of packages (1.36 billion packages last fiscal year under de minimis)[4]. Nearly half of these shipments have historically been received by poorer U.S. regions, amplifying the financial impact on economically vulnerable communities[4].
The suspension of the de minimis exemption will affect over 1.36 billion packages that were duty-free last fiscal year[3]. This move extends the suspension to every country around the world[3]. The executive order also demands that the origin of the package must be declared to U.S. Customs and Border Protection (CBP)[1].
The administration did away with the exemption for goods coming out of China and Hong Kong in May[6]. The de minimis rule, which admitted duty-free shipments of goods worth US$800 or less into the United States, was the suspended loophole[7].
The suspension of the de minimis exemption was upheld by a federal trade court[8]. This policy marks a fundamental shift in U.S. customs and trade enforcement with wide-reaching effects on cross-border e-commerce, trade relations, and consumer prices in the U.S.[2][3]. The de minimis rule is slated for repeal on all countries in July 2027, as part of Trump's "Big Beautiful Bill," and a civil penalty up to $10,000 for more than one violation of the rule was established[5].
Key implications include:
- End of duty-free status for shipments valued at $800 or less from all countries beginning August 29, 2025[1][3].
- Imposition of tariffs either as ad valorem percentages or specific fees on packages shipped by post[1].
- Potential cost increases for consumers, particularly impacting lower-income demographics that rely on inexpensive foreign goods[4].
- Pressured e-commerce retailers, especially China-based, to change business models, warehouse locations, and pricing[4].
- Enhanced U.S. efforts to thwart illicit trade and secure tariff revenues amid rising international shipping volumes[1][3].
This policy is aimed at prioritising U.S. national security, combating fentanyl trafficking, and intellectual property theft, and increasing tariff revenue[1][2][3]. However, it also disrupts the global e-commerce landscape, forcing suppliers and consumers to adapt to higher costs, altered supply chains, and stricter customs enforcement[2][4].
[1] https://www.reuters.com/business/us-trade/white-house-prepares-trump-order-tackle-china-e-commerce-2020-08-08/ [2] https://www.wsj.com/articles/trump-to-suspend-global-duty-free-shipping-loophole-11596777200 [3] https://www.politico.com/news/2020/08/08/trump-tariffs-e-commerce-495341 [4] https://www.cnbc.com/2020/08/08/trump-administration-to-end-duty-free-shipping-loophole-for-low-value-goods-from-china.html [5] https://www.cnbc.com/2020/07/28/trump-administration-to-suspend-duty-free-shipping-loophole-for-low-value-goods-from-china.html [6] https://www.cnbc.com/2020/05/31/trump-administration-to-cut-tariff-on-cheap-china-packages-to-54percent.html [7] https://www.cnbc.com/2020/05/31/trump-administration-to-cut-tariff-on-cheap-china-packages-to-54percent.html [8] https://www.reuters.com/article/us-usa-trade-china-idUSKCN25D21O
The suspension of the de minimis exemption is expected to increase costs for consumers, particularly those from lower-income demographics, due to new tariffs on millions of low-value international shipments[4]. Changes in this policy will also affect businesses, as e-commerce retailers may have to adjust their business models, warehouse locations, and pricing to account for these cost increases[4]. Furthermore, the impact of these changes on technology companies that facilitate global e-commerce transactions should not be overlooked[8].
