• The elimination of the de minimis exemption means that the US import tariff policy now applies to all Chinese packages, regardless of value
• Temu and Shein are shifting business models while consumers face price increases of up to 145% on previously duty-free goods

For years, American consumers have enjoyed a steady stream of incredibly cheap Chinese goods flowing directly to their doorsteps. The US import tariff policy contained a little-known provision that created a shopping paradise for bargain hunters. T-shirts for $10, electronics for $15, and household items for $5 populated platforms like Temu and Shein, seeming almost too good to be true. 

And in a way, they were—propped up by the “de minimis exemption” that allowed packages valued under $800 to enter the US completely duty-free. But as of May 2, 2025, that golden era of bargain hunting has abruptly ended. President Donald Trump has officially closed this loophole, meaning those same goods could now cost more than double as they face tariffs of up to 145%. That $10 t-shirt? Now $24.50. The $20 gadget? Nearly $50.

This seismic shift in US import tariff policy has sent e-commerce giants scrambling to adapt and left consumers on both sides of the Atlantic facing a new reality. As Temu blocks US shoppers from seeing Chinese-shipped products and Shein quietly incorporates tariff costs into its pricing, we’re witnessing nothing less than a fundamental restructuring of global e-commerce dynamics.

What was the de minimis exemption?

The de minimis exemption, introduced in 1938 as Section 321 of the Tariff Act of 1930, allowed packages valued under $800 to enter the US duty-free. The provision was originally designed to facilitate trade by eliminating the administrative burden of collecting negligible duties on low-value goods at a high cost to the government.

Over time, this exemption became what a Congressional Research Service report called the “primary path” for Chinese exports to enter the US market. From 2018 to 2023, the value of low-value e-commerce exports from China ballooned from $5.3 billion to $66 billion, according to a February report from the Congressional Research Service.

US Customs and Border Protection processed a billion such packages in 2023, the average value of which was $54.

Why did Trump end the exemption?

In a cabinet meeting at the White House on Wednesday, Trump referred to the loophole as “a scam.”

“It’s a big scam going on against our country, against really small businesses,” he said. “And we’ve ended, we put an end to it.”

The Trump administration cited multiple reasons for eliminating the exemption:

1. Fentanyl concerns: President Trump in February said he would eliminate the loophole because he didn’t believe China was taking sufficient action to stem the flow of fentanyl into the US The administration said drug traffickers were “exploiting” the loophole by sending precursor chemicals without having to provide detailed shipping information.
2. Protecting American businesses and jobs: The growing use of the loophole threatened U.S. jobs in warehousing and logistics by encouraging retailers to ship products directly from China to consumers, bypassing US warehouses and delivery networks.
3. Supporting domestic manufacturers: Kim Glas, the president of the National Council of Textile Organizations, which represents American textile makers, told The New York Times that the loophole had “devastated the US textile industry” by allowing “unsafe and illegal products to flood the US market duty-free for years.”

How are retailers responding?

Major Chinese e-commerce platforms are already adapting their business models:

• Temu announced a dramatic shift to its business model. “All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country,” the company said in a statement to CBS MoneyWatch. The company will no longer ship products from China into the United States and is “actively recruiting U.S. sellers to join the platform.”
• Shein began adjusting prices starting on April 25. The company’s website now tells shoppers that tariffs are “included in the price you pay.”
• Other retailers have started displaying tariff surcharges in their online shopping carts to help consumers understand the source of price increases.

For European consumers who have also embraced these platforms, the changes to US import tariff policy serve as a preview of potential shifts in their markets, especially as trade tensions between China and Western economies continue to evolve.

Impact on consumers and markets

The end of the de minimis exemption will have far-reaching consequences:

1. Higher prices: According to The New York Times, Gabriel Wildau, a China analyst at Teneo, an advisory firm, said the change would “take a bite out of Chinese exports” and “force online retailers whose main selling point is dirt cheap prices to raise their prices dramatically.” Wildau warned that “It’s a price shock for price-sensitive US consumers who really enjoyed access to cheap goods.” Goods coming into the United States from China via private carriers like DHL or FedEx will be subject to tariffs of at least 145%.
2. Potential product availability issues: Mary Lovely, an international trade expert and senior fellow at the Peterson Institute for International Economics, told CBS News “You’ll see a much-diminished market and at some point, it won’t be worth it to import to a small market,” so you’ll see products disappearing. As reported by Wired, Temu is currently blocking US shoppers from seeing products shipped from China, effectively narrowing the number of goods for Americans to choose from.
3. Shipping delays: Ryan Young, a trade policy expert at the Competitive Enterprise Institute, explained to CBS MoneyWatch that “It will be an administrative nightmare, so you will see a lot of delays.” This could particularly impact delivery expectations that American and European consumers have grown accustomed to.
4. Changing consumer behaviours: According to CBS News, PwC consumer markets industry leader Ali Furman expects to see consumers start “trading down” by swapping name brands for store labels or even turning to resale platforms to stretch budgets.

Enforcement Challenges and Potential Loopholes

Despite the administration’s intentions, several potential issues remain with the new US import tariff policy:

Goods coming into the US from China via private carriers like DHL or FedEx will be subject to tariffs of at least 145%.However, shipments through the Postal Service face either a tariff of 120% of the value of the goods or a fee of $100 per package, which increases to $200 in June.

The Postal Service has not been legally required to collect information on where products originate, and neither are foreign postal services. This could lead to an increase in schemes that try to bypass China tariffs by using the post office.

Experts question whether the government has enough CBP agents to efficiently inspect packages and enforce policies. Ram Ben Tzion, CEO of Publican, a company that authenticates shipment documentation, told CBS MoneyWatch: “As these adjustments are made, a key question remains, which is the ability of CBP to effectively regulate and enforce these measures. As of today, CBP does not have that ability.”

Who Benefits?

While consumers face higher prices and delays, certain groups stand to benefit from this policy change:

Companies that sell goods made in the US could face less competition as previously cheap China-made goods rise to new price highs. For European businesses selling to American consumers, this could also open new opportunities as the price gap between European and Chinese goods narrows.

Larger corporations with bigger profit margins or more diversified businesses will likely fare better than smaller retailers that operate on thin profit margins, making it difficult to reorganize supply chains.

The future of transatlantic e-commerce

As both retailers and consumers adjust to this new reality, the landscape of online shopping is fundamentally changing. Ben Tzion further remarked to CBS MoneyWatch that “The way we shop online will never be the same.”

Specifically, “everything will take more time, cost more money, and everything that’s price-sensitive won’t be available,” he said.

For businesses exporting to the US, this represents a significant shift in the economics of cross-border e-commerce. Companies will need to reassess their supply chains, pricing strategies, and possibly even consider establishing US-based operations to remain competitive in this new environment.

For European observers, the shift in US import tariff policy offers a case study of protectionism versus consumer access. As European regulators continue to develop their approaches to cross-border e-commerce with China, the outcomes of the American experiment will likely influence policy decisions across the Atlantic.

The elimination of the de minimis exemption marks not just the end of an era of ultra-cheap online shopping, but also signals a broader realignment of global e-commerce dynamics that will continue to unfold in the coming months and years