President Donald Trump has officially shut down a global trade loophole that allowed small parcels to enter the U.S. duty-free, a move expected to hit Chinese e-commerce giants like Shein and Temu the hardest.
Known as the “de minimis” exemption, the policy previously allowed imports of goods valued at $800 or less to bypass customs duties. While initially suspended for shipments from China and Hong Kong in May, Trump’s latest executive order now eliminates the exemption globally, closing a backdoor that online mega-retailers had been using to avoid paying import taxes.
“This loophole has been exploited by bad actors to smuggle illicit substances and evade law enforcement,” Trump wrote in the executive order. He cited the high risk of “evasion, deception, and illicit-drug importation” through low-value shipments that qualified for duty-free treatment.
The rule change is a blow to international retailers who had been re-routing packages through third countries like Vietnam to skirt tariffs. That workaround is now obsolete, as the new order requires all shipments to declare their country of origin to U.S. Customs and Border Protection.
In response, platforms like Temu and Shein had already begun stockpiling inventory in U.S. warehouses to reduce delivery times and offset the tariff impact. After the May crackdown, Temu announced it would switch to a domestic shipping model using U.S.-based distributors, though customers soon reported higher prices and empty inventories.
Chris Tang, a supply chain professor at UCLA, said the global rollback of de minimis means there are no more loopholes left. Even bulk shipments will now face steep import taxes, likely pushing costs onto consumers.
The new rule will also hit sellers on Amazon Haul, a low-cost rival to Temu and TikTok Shop that relies heavily on direct shipments from China. Amazon responded to the change by reaffirming its commitment to competitive pricing across its product range.
Temu did not respond to a request for comment.
Higher Prices Ahead For Shein, Temu, And Amazon Shoppers
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