Trump could triple tariffs and plug the loophole in “de minimis” which could affect temu and shein
Chinese freight under $800 faces 90% tariffs, affecting companies like Shein and Temu. Trump has ended the “de minimis” exemption.
Straight Arrow News
Customers from several e-commerce giants like Amazon, Shein and Temu have already felt the impact of the Trump administration’s imminent closure of trade slips.
The “de minimis” exemption, which allows packages under $800 to enter US tax exemptions, is set to close at 12:01am ET on May 2, with retailers who previously relied on quick delivery of cheap items relying on American consumers. More than half of the packages brought to the US under the exemption come from China and are now added with a 145% tariff.
President Donald Trump said in late April that the 145% rate would “slightly fall” in the future, but that closing the loophole would affect the cost of importing goods from China regardless of the matter. And while the exemption will not be officially closed until after May 1st, some e-retailers have already handed the costs to their customers.
This is something you need to know about closing loopholes in the future and how consumers are already feeling the impact.
What is the “de minimis” exemption?
The De Minimis exemption refers to section 321 of the Customs Act of 1930, and allows the Secretary of the Treasury to waive any obligation or fees that would be more inconvenient to collect taxes than the income is worth.
In other words, it is a trade loophole that allows low-value goods to be shipped tax-free.
The DE Minimis exemption was introduced in 1938 to reduce duties, fees and other taxes on imports under $1 before the threshold was raised to $8 in 1978, $200 in 1993 and $800 in 2015.
Trump originally closed the loophole in February, but later postponed the closure after the package began to stack up without time to plan and execute policy changes. On April 2, Trump announced that appropriate protocols have been put in place to collect revenue for small packages sent through the international postal network.
The De Minimis exemption is set to end at 12:01am ET on May 2nd.
Prices and shipping costs may be affected
Experts have previously said closing the De Minimis loophole could lead to higher prices for products from e-commerce companies such as Amazon, Shein and Temu, and longer delivery times.
Airlines that carry minimal items, such as commercial mail agencies UPS and FedEx, will need to report shipment details to US Customs and Border Protection (CBP), the White House said on April 2.
United Parcel Service (UPS) has since announced plans to cut the workforce by about 20,000 in 2025, citing “new or increased tariffs” and “changes in the economic situation that are common in the US or international.” It also plans to close around 164 facilities by the end of the year.
Temu and Shein Onsumers are already feeling the impact
Starting May 2nd, packages from China under $800 will be tagged with a 120% tariff charge or a $100 package charge. The fee will jump from $100 to $200 on June 1st, according to the White House.
However, de minimis loopholes are not technically closed until May 2nd until overnight, but customers are already seeing the impact of companies relying on importing low-cost goods.
Temu and Shein, two of the largest e-commerce websites based in China, warned on April 16th that they would implement a “price adjustment” from April 25th.
More than half of all packages, including the De Minimis exemption, come from China, and over 30% of all daily packages shipped under De Minimis are from Temu and Shein, Reuters reports.
Reviews of items after April 25th showed that in some cases the prices have more than doubled.
Amazon is not immune
Amazon customers are already beginning to feel the effects.
Amazon CEO Andy Jassy said in an interview with CNBC on April 10 that the US-China trade war would likely mean higher prices for Amazon shoppers. According to Business Insider, investment company Morgan Stanley estimates that around 25% of the non-food items sold by Amazon come from China.
A sample conducted by stock research firm Moffettnathanson Research shows Amazon prices have risen 4.2% for 50 products since April 2, with retailers reportedly canceling orders for products made in China shortly after Trump’s self-proclaimed “liberation day.”
Amazon reportedly plans to list Trump’s tariff costs adjacent to the total price of the product, but later denied such intent after Trump called the move “hostile and political acts.”