The US will end tariff exemptions for low-cost shipments from China and Hong Kong on May 2, President Donald Trump announced on April 2, taking aim at the de minimis policy that has become popular among e-commerce companies.
The decision was part of a package of trade policy changes including sweeping tariffs of up to 49% on trade partners the Trump administration accuses of “unfair trade practices.” The broad moves are expected to escalate a trade war and reshaping global commerce.
The de minimis policy exempts international shipments from import taxes and customs inspections if the retail value is USD 800 or less. Trump attempted to end cheap Chinese goods in a February 1 executive order, which imposed 10% tariffs on goods from China and ended the policy. The decision was paused after it created logistical issues and overwhelmed postal services and customs with inspection of millions of low-value shipments.
Chinese packages that are considered under de minimis will be subject to a duty rate of 30% or USD 25 per item. The price per item will increase to USD 50 after June 1, according to the White House.
De minimis has allowed for “deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids,” according to a White House fact sheet.
White House officials have said Canada and Mexico are conduits for imports of fentanyl and precursor chemicals in small packages are not inspected by customs agents.
Trade experts say this will increase the costs of e-commerce goods coming from China.
Many sellers, such as Temu and Shein, ship orders directly from China to customers to keep prices low. The number of shipments has exploded in recent years. The volume of de minimis imports more than doubled from 2020 to 2024. There were 1.4 billion packages that entered through de minimis, including about 60% coming from China.
Those supporting the end of de minimis say Chinese e-commerce retailers have exploited the policy by shipping low-cost packages to avoid paying duties, hurting American retailers.
Chinese e-commerce players have been gradually shifting their business models, adopting domestic inventory in response to the end of duty-free packages from China.
Prices on Temu and Shein will gradually rise as the cost of securing US warehouse space is taken into account, Yao “Henry” Jin, an associate professor of supply chain management at Miami University of Ohio, said.
“Their pricing advantage are now disappearing because they now have the same cost factors that Amazon has always had,” he said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.