The United States has closed a long-standing tariff exemption that allowed low-value goods under $800 to enter the country duty-free, a move that will significantly impact Chinese e-commerce giants like Shein and Temu. The so-called ‘de minimis’ loophole, which had been in place since the 1930s and raised to $800 in 2016, was described by President Donald Trump as “a big scam” that has now been ended.
Under the new rules, parcels worth less than $800 will face a 120% levy or a flat fee of $100, rising to $200 from June, on top of existing 145% tariffs on all Chinese imports. The change affects about 1.36 billion shipments annually, with 60% originating from China, according to US customs data.
The White House cited concerns over unfair competition and the flow of deadly drugs, particularly fentanyl, as reasons for closing the loophole. Industry associations in the US had long pushed for the change, arguing that Chinese sellers were using deceptive shipping practices to avoid duties.
Chinese e-commerce platforms have already begun adjusting. Temu announced it would stop shipping low-cost items directly from China and instead use a local fulfilment model, while Shein has reportedly raised prices on some goods. Data from Bloomberg shows average price increases of 51% for Shein’s top beauty and health products and 377% for kitchen towels.
China’s commerce ministry warned that the tariffs would increase costs for American consumers and degrade their shopping experience. Industry groups in China condemned the US actions as “hegemonic”, while Shein is reportedly reconsidering its planned London IPO amid the uncertainty.
