A significant change in United States trade policy has taken effect, with the elimination of the long-standing \"de minimis exemption.\" This policy shift, spearheaded by former President Donald Trump, targets the previous allowance for duty-free entry of low-value packages, specifically those under $800. The primary aim is to counter the competitive advantage held by foreign e-commerce giants, particularly those originating from China, such as Temu and Shein, as well as third-party sellers on platforms like Amazon. This move signifies a substantial overhaul of import regulations that will directly impact billions of parcels entering the country annually, fundamentally altering the operational landscape for many online retailers and potentially affecting consumer pricing.
The policy, which became effective on August 29, directly targets a loophole that allowed nearly four million low-value shipments to enter the U.S. daily without incurring tariffs. Most of these packages originated from China and Hong Kong. Former President Trump described this exemption as a \"catastrophic loophole\" in American trade policy, citing concerns over evasion, deception, and the potential for illicit substances to enter the country via these small, untracked parcels.
The immediate impact on companies like Temu was evident even before the full implementation of the global policy change. Following an initial, China-specific suspension of the de minimis rule, Temu experienced a sharp decline in its U.S. daily user base, dropping by 58% in May. This forced the platform to pivot its logistics, moving away from direct shipments from China and instead utilizing U.S.-based fulfillment centers. Consequently, many China-sourced items were temporarily marked as unavailable. PDD Holdings, Temu's parent company, reported a first-quarter revenue of $13.18 billion, falling short of analyst expectations, with operating profit decreasing by 36% to $2.52 billion due to significant margin compression.
Under the revised tariff structure, businesses are now subject to ad valorem duties determined by the origin country's specific tariff rates or fixed charges ranging from $80 to $200 per item. Goods from countries with existing tariff rates above 25% will face the higher $200 per item charge, while those below 16% will incur an approximate $80 fee. According to Chris Tang, a professor of global supply chain management at UCLA, this means companies will now face substantial import taxes, even for bulk shipments, a cost that will likely be passed on to consumers, leading to higher prices.
Even Amazon's own discount platform, Amazon Haul, which directly competes with services like Temu and TikTok Shop and also relies on direct shipments from China, will feel the effects of these new tariffs. Despite an Amazon spokesperson's assurance that the company will continue to offer competitive pricing, the increased costs are unavoidable. This expanded policy follows Trump's May decision to suspend China's de minimis exemption, which had already led to a 10.7% decrease in air cargo volume from Asia, demonstrating the immediate impact of such trade adjustments. The current move further closes any remaining avenues for avoiding tariffs, including routing goods through third countries like Vietnam, which previously faced lower tariff rates.
The recent removal of the \"de minimis exemption\" represents a pivotal shift in U.S. trade policy, reshaping the landscape for international e-commerce and directly affecting companies that have benefited from duty-free imports. This new regulatory environment, driven by concerns over trade imbalances and product oversight, will undoubtedly lead to higher operational costs for retailers, potentially translating into increased prices for American consumers. The long-term implications for global supply chains and the competitive dynamics between domestic and international online marketplaces will be significant, prompting a recalibration of business strategies across the industry.