Under the de minimis rule, US-bound shipments under $800 qualify for duty-free treatment when sent directly to individual consumers and in the past this has been heavily utilised by overseas online retailers such as Shein and Temu.
Under the new rules, which sees a supplemental tariff of 10% on all products from China and Hong Kong, imported products with a country of origin of China or Hong Kong will no longer be eligible under the De Minimis provision under 19 USC 1321 regardless of their value.
The announcement has already sparked repercussions with the US Postal Service announcing it would “temporarily suspend international package acceptance of inbound parcels from China and Hong Kong Posts until further notice,” effective 4 February.
According to the US congressional committee on China’s 2023 report, Temu and Shein together likely accounted for more than 30% of all packages shipped to the United States each day under the de minimis provision. Nearly half of all packages shipped under de minimis come from China, it adds.
eCommerce expert Ben Donovan wrote in a piece featured on Marketplace Pulse, the move will see the end of the era of ultra-cheap direct-from-China retail.
“The Trump administration’s decision to suspend de minimis shipments from China marks the end of a remarkable period in US e-commerce. What started as an Obama-era increase of the duty-free threshold from $200 to $800 in 2016 created the foundation for Temu, Shein, and most recently, Amazon Haul.
“According to US Customs data, de minimis imports exploded from $9.2bn in 2016 to $54.5bn in 2023, with Chinese sellers accounting for nearly 60% of all shipments.
He adds, however, pointing to data, that while shipment volumes have surged under the benefit the value of imports has dramatically declined from $111.71 in 2019 to $54.50 in 2023 (on a per shipment basis).
“A plunge in average import value indicates Chinese platforms have exploited the de minimis threshold to push increasingly lower-priced goods, forcing US retailers to compete at ever-lower price points or risk losing sales,” Donavan notes.
“The impact on domestic retailers has been substantial. US-based Gap paid $700m in import taxes in 2022, while direct-from-China competitors paid virtually nothing. This advantage allowed Chinese platforms to consistently undercut US retailers, leading to rapid growth.”
He adds this will be a moment of monumental change for US sellers as the playing field is “finally levelling”.
US Ways and Means Committee Chairman Jason Smith explains: “President Trump is ensuring that China can no longer avoid applicable tariffs simply by exporting packages with relatively low values."
He continues: "The effect of increased abuse of the de minimis privilege has been to deny the US Government collection of billions of dollars in additional revenues while unfairly disadvantaging American manufacturers. Legislation the Committee adopted last year would have ended the privilege for nearly 70% of imports from China – strengthening the effectiveness of the Section 301 tariffs that President Trump previously authorised. The Trump Administration is leaving no stone unturned when it comes to restoring some backbone to America’s trade policies.”
Meanwhile GlobalData retail analyst Neil Saunders tells Just Style could be repercussions for US consumers.
He says: "The ending of the de minimis rule for products from China means two things: first, packages will be subject to customs’ scrutiny, which means they may take a lot longer to reach consumers. This is especially so as it is not clear that US Customs has the capacity to handle millions of additional packages each week.
"And second, customs duties, tariffs, and taxes might be payable on shipments. This ultimately means the cost of business is higher and somewhat undermines the low-cost business model of Chinese marketplaces like Shein and Temu.
"Ultimately, that may lead to consumers paying higher prices for products."
Dr Sheng Lu, professor of apparel studies at the University of Delaware, told Just Style that Shein and Temu would face increased checks on top of import duties, leading to considerably longer delivery time and higher operational costs.
Of course, it is not just Shein and Temu that stand to lose out.
“Suddenly losing the de minimis benefits would be devastating for hundreds of thousands of small and medium-sized (SME) e-commerce businesses in China selling products to the US,” says Lu. “Similar to Shein and Temu, in addition to the new tariff burden, losing de minimis benefits could lead to significant additional paperwork and due diligence requirements for SME e-commerce owners. Unlike large corporations like Shein, these SMEs may not have the financial and human resources to meet the requirements.”
Lu also warned however, that blocking China and Hong Kong from the De Minimis benefit, wouldn’t necessarily “close the loophole”.
Since de minimis imports are exempt from standard customs procedures, transshipment (i.e., shipping products made in China to the US via a third country which remains qualified for de minimis, likely one of China’s Asian neighbours) may become a new concern and controversy.”
Shein did not return Just Style's request for comment while Temu was unable to comment at time of press.
