President Donald Trump has imposed tariffs on China, Canada, and Mexico, targeting a trade provision that has contributed to the growth of budget online retailers like Temu and Shein. The tariffs signed by Trump include a 25% tariff on goods from Canada and Mexico and a 10% tax on goods from China, with a lower 10% tariff on energy resources from Canada. These duties are set to take effect on Tuesday.
The executive orders eliminate a trade exemption known as “de minimis,” which allows exporters to send packages worth less than $800 into the U.S. duty-free. This provision, in place since the 1930s, has faced increased scrutiny in recent years. The Biden administration took steps to address the “overuse and abuse” of de minimis, citing concerns about product safety and unfair competition from Chinese e-commerce companies.
In 2024, the U.S. processed over 1.3 billion de minimis shipments, a significant increase from 139 million in 2015, according to data from the U.S. Customs and Border Protection agency. This loophole has enabled companies like Temu, Shein, and AliExpress to offer inexpensive products to U.S. consumers, including apparel, household items, and electronics.
Temu and Shein have gained popularity in the U.S., with Temu becoming the most downloaded free app on Apple’s list for two consecutive years. Both companies have engaged in aggressive digital marketing efforts to attract bargain-seeking shoppers. While representatives from these companies did not respond to requests for comment, Shein has emphasized import compliance as a priority and expressed support for reforming the de minimis provision.
The Trump administration’s crackdown on the de minimis loophole could benefit online marketplaces like Amazon, eBay, and Etsy, which compete with companies like Temu and Shein. Amazon, in particular, has a significant presence in connecting Chinese manufacturers with American consumers through its third-party marketplace. The company’s marketplace accounts for a substantial portion of products sold on the site, with Chinese merchants playing a significant role.
As the de minimis loophole faces challenges, Temu and Shein have adjusted their strategies. Temu has started onboarding Chinese sellers with U.S. warehouse inventory to expedite shipping to American customers, while Shein has established distribution centers and a supply chain hub in the U.S. Amazon’s response to the loophole includes the launch of Haul, an outlet for third-party sellers to ship goods directly from China to U.S. consumers.
