What is the loophole in De Minimus?
Ending the De Minimis loophole means that items under $800 shipped from China will no longer be able to enter US tax-free.
President Trump signed an executive order on Wednesday, July 30th, ending a loophole in the De Minimis trade that allows low-value goods to be shipped to US tax-free.
Packages sent to the US under $800, sent outside the international postal network, have now faced “all applicable obligations,” according to the White House. Orders will be effective on August 29th.
Shein and Temu are two popular fashion brands that attract American shoppers and often seek to order bulk orders at a heavily discounted cost, often with free shipping. With the end of the trade loophole, US consumers are looking to increase prices, including the fast fashion orders they once had.
Here’s what shoppers need to know about the end of a trade loophole:
What is De Minimis and why does it affect Shein and Temu?
Shein and Temu sell a variety of products, including clothing, furniture and more, which arrive quickly and cheaply.
More than half of all packages, including the De Minimis exemption, come from China, and more than 30% of all daily packages shipped under De Minimis are from Temu and Shein, Reuters reported in February.
The provisions of the 1930 Customs Act allow the De Minimis exemption, which is the main route for e-commerce imports from China, according to a parliamentary report from 2018 to 2023.
Eliminating China’s loopholes would have “a widespread negative impact on Americans, particularly poor consumers, especially poor consumers,” according to the Cato Institute.
Republican Sen. Jim Banks of Indiana welcomed the executive order, saying, “For too long, countries like China have been flooding the market with tax-free, cheap imports.”
Reuters contributed to reporting this article
