President Donald Trump’s decision to suspend the de minimis exemption for imports from China marks a significant shift in US trade policy, particularly affecting Chinese e-commerce giants like Shein and Temu.
The provision, which allows goods with a retail value under $800 to enter the US duty-free, has been a key facilitator for platforms like Shein and Temu, enabling them to bypass import duties and red tape on low-value packages. The suspension, which was part of a broader tariff initiative, has caused confusion and disruption in logistics and customs operations.
The de minimis exemption is a provision in US tax law that allows companies to avoid import taxes and customs inspections on international shipments valued at less than $800. Originally designed in 1930 to aid American travelers bringing back souvenirs, the provision was raised from $200 to $800 by Congress in 2016. Its use has increased dramatically over the years, particularly with the rise of Chinese-based e-commerce platforms like Shein and Temu, which use it to send millions of small parcels into the US duty-free.
In fiscal year 2024, approximately 1.36 billion shipments entered the US using the de minimis provision, a significant increase from 637 million shipments just four years earlier. According to US Customs and Border Protection, Chinese imports make up about 75% of de minimis products found online.
The growing use of de minimis, particularly by Chinese companies, has raised concerns among US lawmakers and customs officials. Critics argue that it has facilitated the entry of unsafe or counterfeit goods and has allowed China-linked platforms to undercut US businesses. Some lawmakers have also voiced concerns about the ease with which goods from regions like Xinjiang—where forced labor is allegedly used—can enter the US duty-free.
The decision to suspend the de minimis provision for China is part of a broader effort to address these concerns. US companies, particularly those in industries like manufacturing, have argued that Chinese sellers are unfairly benefiting from the exemption, making it difficult to compete. For example, businesses like Stromberg Carlson Products, which manufactures recreational vehicle goods in the US, have faced high tariffs on their Chinese-made products while their competitors ship similar items from China duty-free under de minimis.
Shein and Temu are among the largest beneficiaries of the de minimis exemption. A 2023 report from the House Select Committee on the Chinese Communist Party noted that these two companies account for more than 30% of all de minimis shipments to the US Shein, a fast-fashion retailer, and Temu, a marketplace for a wide range of products, have thrived by using the exemption to offer inexpensive goods without the burden of tariffs.
The revocation of de minimis for China-bound imports will likely affect Shein more than Temu. While Shein continues to rely heavily on Chinese manufacturing, Temu has gradually shifted to using US-based inventory for a portion of its sales. As of July, about 20% of Temu’s US sales came from local sellers who store their goods in US warehouses. Both companies have adjusted their strategies to minimize disruption, with Temu increasing its focus on US warehouse inventory and Shein diversifying its supply chain outside China.
While the de minimis provision is part of US trade law, exceptions can be made to prevent “unlawful importations,” such as the concerns raised about unsafe goods and forced labor. Although the Biden administration took steps last year to limit de minimis, Trump’s executive order represents a more direct intervention. Legal experts suggest that Trump’s actions could face challenges, as altering the provision on a broad scale may require congressional approval.
In the short term, the suspension has led to significant confusion, with the US Postal Service briefly halting the acceptance of parcels from China and Hong Kong before resuming normal operations. The decision has caused some logistics companies to adjust their prices and strategies to account for the new tariff and documentation requirements.
The removal of de minimis for China imports could have several implications for US consumers and e-commerce platforms. While experts predict that the impact on product prices might be minimal due to the nature of the tariffs, there is concern over the additional compliance and documentation requirements that could slow down customs processing times. The US Postal Service and other logistics providers will need to adapt to handle the increased volume of small packages, which could lead to delays and higher costs.
In the longer term, companies like Shein and Temu may need to further adapt their business models, either by expanding their use of US-based inventory or by finding new ways to navigate the evolving regulatory landscape. Larger companies, such as Amazon, could also benefit from the changes as their foreign competitors face new hurdles in the US market. However, some critics argue that the new measures may burden US consumers, who could face higher prices and slower delivery times as a result of the increased tariffs and red tape.
