US closes duty-free loophole, new tariffs hit Temu and Shein
Trump ends duty-free rule, Temu and Shein face higher costs (Illustrative photo: Getty Images)
The US administration is closing the de minimis loophole on May 2, which allowed online retailers, including Chinese companies Temu and Shein, to import goods worth up to $800 duty-free, reports NBC News.
President Donald Trump signed an executive order to end the de minimis trade exemption, effective May 2. This rule previously allowed shipments worth less than $800 to enter the US without customs duties, enabling rapid growth for Chinese e-commerce giants like Temu and Shein.
The administration initially attempted to close the loophole in February, but the move overwhelmed US Customs and Border Protection, causing temporary halts in package processing from China and Hong Kong. To mitigate disruption, Trump delayed the decision, but the rule is now set to take effect.
Along with the loophole closure, new tariffs will be introduced: a 30% duty or $25 per item will be applied to goods previously exempt from customs. The rate will increase to $50 per item on June 1.
Retailers adjust to new conditions
Critics argue that the de minimis provision has given an unfair advantage to Chinese online retailers, leading to a surge in low-cost shipments that often bypass thorough inspections.
In 2024 alone, US Customs processed more than 1.3 billion such shipments. The Trump administration also voiced concerns that the loophole could be exploited for importing illicit substances, including fentanyl.
Temu and Shein are already adjusting to the new reality by increasing their presence in the US. Temu has begun promoting products stored in American warehouses to minimize shipping times, while Shein has opened distribution centers in Illinois, California, and Seattle.
The closure of the de minimis loophole comes amid broader trade tensions. On April 2, the US announced new tariffs on Chinese imports, set to reach a total of 54% on April 9.
This move follows additional tariffs on all trading partners, with China facing the highest rates. According to data published by the White House, the US imposed a 34% tariff on Chinese imports, about half the rate that Beijing applies to US imports (67%).
