On April 2, 2025, President Trump signed an executive order eliminating the 'de minimis' trade loophole, which previously allowed low-value packages from China and Hong Kong to enter the U.S. duty-free.

This change will take effect on May 2, 2025, and significantly impacts e-commerce platforms like Temu and Shein, which have relied on this exemption to sell low-cost items to American consumers.

Under the new regulations, shipments valued at $800 or less will incur a duty of either 30% of their value or a flat fee of $25, which will increase to $50 after June 1, 2025.

The Trump administration argues that closing this loophole is necessary to combat the illegal flow of synthetic opioids from China, as these low-value shipments are less likely to be inspected by customs.

Critics, however, contend that the de minimis exemption provided essential benefits to consumers, particularly lower-income individuals, who could access affordable goods without additional tariffs.

The de minimis exemption allowed duty-free entry for shipments valued under $800, which has significantly benefited Chinese e-commerce retailers like Temu and Shein.

In 2024, nearly 1.4 billion packages utilized the de minimis exemption, with the majority originating from China, underscoring its importance to U.S. consumers and retailers.

With the new tariffs in place, e-commerce companies may need to raise prices or shift to bulk shipping and U.S.-based warehousing to mitigate the impact of increased duties.

Following the tariff announcement, stock prices for Temu's parent company, PPD Holdings, and competitors like Alibaba fell, reflecting market concerns over the new costs.

Despite the impending tariff changes, Temu is projected to sell $30 billion worth of products in the U.S. in 2025, indicating a strong market presence amid regulatory challenges.

Both Temu and Shein have expanded their operations in the U.S. in response to scrutiny, with Temu directing customers to U.S.-based inventory and Shein establishing distribution centers in several states.

Trump's universal tariffs have faced bipartisan criticism for acting as a tax on consumers and businesses, disproportionately affecting those who may struggle to absorb increased costs.