The April 9 executive order has led US President Donald Trump to close the doors on tariff exemptions for small packages from China and Hong Kong. The policy, which came into effect on May 2, terminated the so-called “minimum” privileges for direct consumer products arriving from two Asian markets.
Under the now-deprecated loophole, items worth less than $800 may enter the United States without demanding duties or customs declarations. The exemption was originally intended to avoid bureaucracy, which is more expensive than low-value shipping, but it became a backdoor for companies like Shane and Tem to flood the American market with cheaper products.
According to customs data, an estimated 4 million such packages entered the United States every day in 2024, many of which were born from the Chinese e-commerce giant.
De minimis tax tenure is over
The Latin word “de Minimis” has existed in the US Customs Act since 1938. Initially, it eliminated tax revenue inefficiencies, and the value threshold was only $1 for decades before gradually increasing to $800 under President Obama in 2016.
Compared to international norms that are around $40 in Canada and $150 in the European Union, this unusually high threshold has opened the door for small imports.
Chinese retailers used the system by delivering goods directly from manufacturing centers to American consumers and bypassing distribution hubs and domestic taxes liabilities. Shein, Temu, and Alibaba’s Aliexpress sent everything from $2 blouses to $10 gadgets at speeds and prices that traditional US retailers struggled to match.
American consumers have searched for a large selection of these inexpensive products. This has really strained border officials, overwhelming airports and transport channels. Port authorities also alleged that illegal drugs, including fentanyl, had arrived in the United States. Critics also argued that some goods are banned for imports from areas related to human rights abuses.
De Minimis products currently face 120% tariffs
Under the executive order signed by Trump, de Minimis shipments from China and Hong Kong are currently either a rough 120% tariff or a flat rate starting from $100. That fee will double to $200 on June 1st.
The administration is also planning to phase out Exemption In other countries, the U.S. Customs and Border Protection Agency collects obligations on small compartments that come in to complete the system.
Products from Chinese platforms currently need to incur additional charges being handed over to consumers, but the abolition of the De Minimis tax does not prohibit purchasing from platforms such as Shein and Temu.
According to Bloomberg Report On Friday, Temu began adding mandatory fees to product selection, informing customers that delivery times would be longer as the cargo uses slower sea-based logistics instead of air freight.
Trade talks between the US and China could begin
Chinese officials may be open to negotiate with the US on tariff issues, according to Reuters. A Commerce Department spokesperson confirmed that American officials recently reached “multiple times” through various channels to launch discussions.
Still, Beijing argues that negotiations must start with unilateral removal of US tariffs.
“If the US wants to speak, it must show its integrity and be prepared to correct the wrong practicesAccording to a CNBC translation, the spokesman said in a statement Friday.
Secretary of State Marco Rubio I said Fox News’ Honey On Thursday, “Chinese people want to meet and talk.”
Following the latest developments, the US dollar transaction 7.24275 against the Chinese Yuan on Friday, down 0.03560 or 0.49% from previous trading sessions.
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