Major Tariff Loophole Ended Today—Here’s What That Means For Cheaper Imports From China

Topline The “de minimis” trade exemption allowing online retailers and marketplaces to ship low-cost items without paying duties was closed Friday, likely increasing the prices of items sold on Temu, Shein, eBay and Etsy, among others. Trump referred to the commonly used trade exemption as a “big scam going on against our country, ... More against really small businesses.” Key Facts President Donald Trump signed an executive order on April 2 eliminating the de minimis trade exemption for imported goods from China and Hong Kong, taking effect early Friday. The U.S. Postal Service will choose whether to charge a 120% tariff on low-priced packages shipped from China and Hong Kong or include a flat fee of $100 per shipment, though the fee may increase to $200 by June, according to The Washington Post. If packages are shipped through an express mail carrier like DHL or FedEx, the shipments will be subject to tariffs as high as 145%, The New York Times reported. Neither Temu nor Shein—major low-cost retailers whose goods are mainly produced in China—immediately responded to requests for comment. Get Forbes Breaking News Text Alerts: We’re launching text message alerts so you’ll always know the biggest stories shaping the day’s headlines. Text “Alerts” to (201) 335-0739 or sign up here . Crucial Quote During a Cabinet meeting Wednesday, Trump referred to the de minimis provision as “a big scam going on against our country, against really small businesses.” He added, “We put an end to it.” What Is The ‘de Minimis’ Trade Exemption? The de minimis trade provision allowed companies to import packages valued at $800 or less to the U.S. without paying duties or certain taxes. Originally implemented under the Tariff Act of 1930, American tourists previously used the exemption to send back goods they bought overseas tax-free, the Times reported. Congress increased the minimum value on packages subject to de minimis from $200 to $800 in 2016. The exemption boosted sales and deliveries among discount Chinese online retailers, like Temu and Shein, which are responsible for about 30% of de minimis U.S. imports, according to a 2023 report from the House Select Committee on the Chinese Communist Party. The Biden administration reportedly proposed changes to de minimis in 2024, citing “overuse and abuse” by companies relying on the exemption. What Are The Most Popular Goods Shipped Under De Minimis? A majority of the goods relying on the de minimis loophole include household items, apparel and electronics, Amit Khandelwal, a professor of global affairs and economics at Yale University, told the New York magazine. In 2021, the most common Chinese imports included furniture, bedding, lamps, toys, games, sports equipment, paint and TVs, while China was the largest source of textile imports to the U.S., according to government data, though it’s unclear how many of those imports relied on the exemption. Is It Cheaper To Buy Directly From Chinese Manufacturers? Some videos circulating on social media have tried to sway American consumers to purchase luxury items for lower costs from Chinese manufacturers in recent weeks, though companies have said the products shown aren’t authentic. One video claims consumers can purchase Lululemon leggings for roughly 5% of their price in the U.S. if purchased from China directly, though Lululemon told NBC News in a statement it was not associated with the manufacturer mentioned in the post. Another since-deleted video claimed a Hermes Birkin bag, typically sold by the French retailer at $38,000, could be purchased for $1,000. Hermes denied the video’s claims in a statement to the Times, while Birkenstock also said the videos featured “knockoffs” of its products. How Will Temu’s Prices Change? Temu issued a notice to customers last month indicating a “price adjustment” would be implemented starting April 25, as the company cited “recent changes in global trade rules and tariffs” that increased operating expenses. Temu now includes “import charges” covering “all customs-related processes and costs” to ship products to the U.S., though the retailer gives shoppers the option of buying goods from local warehouses that don’t incur additional charges. Import charges appear to change for each product sold on Temu: A $17.72 car vacuum included an import charge of $22.78, while a $19.43 surge protector included an additional $26.23 fee. How Will Shein’s Prices Change? Shein reportedly notified shoppers in late April that “tariffs are included in the price you pay” and “you will never pay extra at delivery,” though it’s not immediately clear when the change was implemented. Most prices for products sold on Shein appeared to change as early as April 25, according to Bloomberg, which reported price hikes as high as 377% for some items. How Will Etsy’s Prices Change? Etsy said in a statement last month a “vast majority” of packages shipped from sellers on the site will likely not be impacted by tariffs. The company said it was exploring options to let customers know how tariffs would influence costs on purchases, though it also called on sellers to pre-pay the costs of tariffs to help “alleviate some confusion” and assist consumers. How Will Ebay’s Prices Change? In a statement last month, eBay warned U.S. customers who import goods from China and Hong Kong may be charged an additional fee of between $10 and $30 for each package. The online marketplace said it would help sellers and buyers navigate additional duties needed for packages and remove late shipment rates if needed. Will Amazon’s Haul Be Impacted? The White House on Tuesday condemned Amazon for reportedly planning to display price increases associated with Trump’s tariffs. White House Press Secretary Karoline Leavitt called the reported move a “hostile and political act by Amazon,” though company spokesperson Tim Doyle told the Washington Post there was “never a consideration” to display the additional costs. Doyle told Forbes, however, Amazon “considered the idea of listing import charges on certain products” on its low-cost Haul platform, though this was “never approved and not going to happen.” While the impact of tariffs won’t be displayed, prices on Amazon have reportedly increased since early April. Key Background Both the Trump and Biden administrations have taken aim at the de minimis trade provision in recent years as they claimed fentanyl could be coming in through shipments. Several trade groups, including the AFL-CIO, have called on Trump to remove the provision for months, arguing de minimis poses “damages and threats” to companies. Forever 21 blamed de minimis for its bankruptcy filing in March, arguing fast-fashion companies had “[taken] advantage” of the provision to “undercut our brand on pricing and margin.” Trump eliminated the exemption after implementing 10% tariffs on all Chinese goods in February, though he reversed his decision days later. In his reversal, Trump noted the provision would be cut again after Commerce Secretary Howard Lutnick created a system to “fully and expediently process and collect tariff revenue.” The U.S. implemented reciprocal tariffs against more than 180 trade partners during Trump’s so-called “Liberation Day” in April. Among the tariffs was a 125% levy on Chinese imports in response to China’s retaliation against Trump’s tariffs, meaning a combined 145% tariff would be in place for many Chinese goods. Further Reading Trump Reinstates ‘De Minimis’ Tariff Exemption For Shipments Under $800—Boosting Shein And Temu ( Forbes ) Trump Applauds Bezos After Amazon Refutes Claim It Planned To Display Tariff Costs ( Forbes ) Source: https://www.forbes.com/sites/tylerroush/2025/05/02/major-tariff-loophole-closed-today-and-cheap-imports-will-be-hit-hard-heres-what-to-expect/