US President Donald Trump, by executive order on April 9, is closing the door on tariff exemptions on small packages from China and Hong Kong. The policy, which took effect on May 2, has ended the so-called “de minimis” privilege for direct-to-consumer goods arriving from the two Asian markets. Under the now-defunct loophole, goods valued under $800 could enter the US without duties or requiring customs declarations. The exemption was originally meant to avoid costly bureaucracy over low-value shipments, but became a backdoor for companies like Shein and Temu to flood the American market with inexpensive merchandise. According to customs data, an estimated 4 million such packages entered the US daily in 2024, many originating from Chinese e-commerce giants. De minimis tax tenure comes to an end The term “de minimis,” Latin for “about minimal things,” has existed in US customs law since 1938. It initially eliminated inefficiencies in tax collection, and the value threshold sat at just $1 for decades before rising incrementally to $800 under President Obama in 2016. This unusually high threshold compared to international norms, around $40 in Canada and $150 in the European Union, opened doors for small parcel imports. Chinese retailers used the system by shipping goods directly from manufacturing centers to American consumers, bypassing distribution hubs and domestic tax 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 sought these cheap products in mass, which immensely strained border officials, overwhelmed airports, and shipping channels. Port authorities claimed it was also how illegal drugs, including fentanyl, reached the United States. Critics also alleged that some of the goods skirted bans on imports from regions implicated in human rights violations. De minimis goods now face a 120% tariff Under the executive order signed by Trump, de minimis shipments from China and Hong Kong are now subject to either a steep 120% tariff or a flat fee starting at $100. That fee will double to $200 on June 1. The administration also plans to phase out the exemption for other nations once the US Customs and Border Protection agency finalizes systems to collect duties on incoming small parcels. The elimination of the de minimis tax doesn’t ban purchases from platforms like Shein or Temu, although goods from the Chinese platforms must now clear customs and incur additional fees, which are being passed on to consumers. According to a Bloomberg report on Friday, Temu has begun adding duty charges to select products and has told customers it will take longer delivery times because shipments will use slower sea-based logistics instead of air freight. Trade talks between the US and China could start According to Reuters, Chinese officials may be open to negotiating with the US on tariff issues. A spokesperson for the Ministry of Commerce confirmed that American officials have recently reached out “multiple times” through various channels to initiate discussions. Still, Beijing insists that any negotiations must start with the removal of unilateral US tariffs, because their existence is “a sign of bad faith.” “ If the US wants to talk, it should show its sincerity and be prepared to correct its wrong practices ,” the spokesperson said in a statement on Friday, according to a CNBC translation. US Secretary of State Marco Rubio told Fox News’ Hannity on Thursday that “the Chinese want to meet and talk.” Following the latest developments, the US dollar traded at 7.24275 against the Chinese yuan on Friday, a decline of 0.03560 or 0.49% from the previous trading session. Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
