Trump triples tariffs to plug ‘de minimis’ loophole, could impact Temu and Shein

• Starting May 2, Chinese businesses will face a 90% tariff on shipments under $800, up from an initial 30%. The tariff could rise to $150 per item in June, affecting companies like Shein and Temu that benefited from the “de minimis” exemption.
• In 2024, over 1 billion packages used the exemption, double the amount from 2022.
• Public policy experts, including the Cato Institute, argue that the new tariffs could hurt low-income customers, reduce competition and disrupt supply chains.

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A loophole that allowed many Chinese retailers to ship low-cost items into the U.S. is being closed with new tariffs, though at higher rates than initially expected.

Retailers benefited from ‘de minimis’ exemption

Companies like Shein and Temu have widely used the “de minimis” exemption, which applies to packages valued at less than $800, to keep prices low for customers. According to U.S. Customs and Border Protection, more than 1 billion packages took advantage of the exemption in 2024, double the number reported in 2022.

Initially, President Donald Trump imposed a 30% tariff on these shipments. However, after China implemented its own tariffs on U.S. goods, the White House announced Tuesday, April 8, that the tariff rate would increase to 90%, tripling the original levy.

On April 2, Trump also signed an executive order targeting deceptive shipping practices used by China to import synthetic opioids into the U.S. The order emphasized that while the U.S. previously had a generous de minimis exemption, China has strict import restrictions and limits the use of its own de minimis exemptions.

New rates take effect May 2

Beginning May 2, Chinese businesses will face duties on shipments under $800. Packages from China will be subject to a 90% tax, amounting to $75 per item, which is expected to rise to $150 in June.

The Cato Institute, a public policy research organization, has warned that eliminating the de minimis exemption could negatively affect Americans, particularly low-income consumers. The organization also stated that the policy change could require restructuring of supply chains, reduced competition, and limited consumer choices.