Trump closes tariff loophole that benefits Chinese e-commerce companies

Your next Temu haul just got a little more expensive.

The tariffs Donald Trump put into place on February 1 eliminated a loophole that Chinese companies used to send small packages to the US duty-free. In recent years the loophole, called the de minimis exemption, has fueled the growth of Chinese e-commerce companies like Temu and Shein. Around 1.4 billion de minimis packages were sent to the US in fiscal year 2024, double the number shipped in 2022, Bloomberg reported.

The de minimis exemption was put into place by the Tariff Act of 1930, and was intended to allow US travelers to mail goods home from other countries without paying tariffs, the New York Times reported. The duty-free threshold was $200 until 2016, when Congress raised it to $800.

Both the Biden and the second Trump administrations sought to eliminate de minimis over competitive concerns with China and fears that it could facilitate the illegal drug trade. According to the National Bureau of Economic Research, ending the de minimis loophole could cost US consumers $11 billion to $13 billion.

Amazon could benefit from the end of de minimis, as its “competitors will be negatively affected,” NYU business professor Yannis Bakos told the New York Times. Recently, Amazon has been trying to woo customers away from Temu and Shein with Amazon Haul, its new mobile-only storefront where everything costs less than $20. But Temu seems to have anticipated the end of de minimis, according to Bloomberg, as it’s engaging in more bulk shipping.