Goodbye to the de minimis rule
How New Trade Rules Will Make Shein and Temu Shopping More Expensive for Millions of Americans
President Donald Trump has just signed into law a major change in U.S. trade rules. He eliminated an important rule called the “de minimis exemption”. It was a regulation that allowed small packages valued at $800 or less to enter the United States duty-free (import taxes).
This also means plenty of orders from online shops such as Shein and Temu could now cost more. Let’s take a look at what it is and what it will do to you.
What was the de minimis exemption?
The de minimis exemption was a trade rule that allowed small packages to enter the U.S. without paying extra taxes. If the package was worth $800 or less, it did not have to pay duties.
This regulation was extremely useful for individuals buying products online. It was less expensive and faster to get products from places like China, where the majority of popular e-commerce retailers are based. This regulation was used by millions of Americans to get affordable clothing, electronics, and more.
Why did Trump repeal the de minimis exemption?
President Trump ended this rule because of concerns over illegal goods and unfair trade practices. In an executive order, he said that many companies used this rule to avoid paying taxes, to the detriment of American companies and law enforcement.
He also said that it was easy for illegal goods to be hidden in these small packages, which posed security risks.
In May, Trump first ended the rule only on imports from China and Hong Kong. Now the rule is ended on packages from every country across the world. This is a big change.
What does this mean for online shopping?
Without a de minimis exemption, all small packages coming into the U.S. will have to pay import duties based on their value and where they’re coming from.
For example:
- For countries with a tariff rate of less than 16%, import taxes can be approximately $80 for every item.
- For countries with a tariff rate of between 16% and 25%, taxes can be approximately $160 for every item.
- For countries with a tariff rate of more than 25%, taxes can be approximately $200 for every item.
This means that the likes of Shein and Temu will have to pay such taxes. They will likely pass on some or all of the extra cost to consumers in the form of higher prices.
How are Shein and temu reacting?
Shein and Temu have both been moving toward this change for a while. When the exemption expired on China in May, Temu said it would change how it sends items to the U.S. They were going to send orders from warehouses in the U.S. to avoid delays and extra taxes.
Temu said it would keep prices steady, but most shoppers have discovered higher prices and some items selling out quickly.
Shein and others are adjusting as well. They have been shipping massive amounts of goods to U.S. warehouses to preload in advance of the new rule’s start date. But when they need to restock, they will get slammed with higher costs.
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Why can’t these companies use other countries to avoid taxes?
Before this new regulation, companies tried to send small packages through countries like Vietnam to avoid China’s high tariffs. Now, though, the regulation requires the country of origin to be declared very clearly. That is, companies can’t hide where the goods really come from in order to avoid paying tax.
So, there aren’t any easy loopholes for the new import taxes anymore.
Who will be most affected by these changes?
Shein, Temu, and other Chinese e-commerce sites sell to millions of Americans. The items tend to be cheaper than the same ones sold in America, which is why individuals buy from them.
However, this change will affect lower-income households the most. Research from UCLA and Yale suggests that about 48% of small packages that were duty-free shipped came to America’s poorest neighborhoods. Only 22% came to the richest neighborhoods.
This will affect people who most rely on cheap online shopping.
How big is this change?
This is a huge shift in how imports work. U.S. Customs and Border Protection (CBP) said that they process nearly 4 million duty-free small packages every day. Last year, nearly 1.36 billion packages came in duty-free under the de minimis exception.
Under the new regulation, almost all of those packages will now be charged import taxes starting August 29.
What about other sellers like Amazon?
The new regulation also affects millions of smaller sellers on websites like Amazon Haul, a discount shopping site that competes with Temu and TikTok Shop. Those sellers often ship directly from China to U.S. customers.
Amazon said it will continue to offer the low prices and wide range but made no comment on how the new taxes would impact prices.
May the prices still remain low?
Some companies may attempt to keep prices low in the short term by using warehouses in America or delivering products in bulk. But analysts say this can only continue for so long.
Chris Tang, a professor of supply chain at UCLA, said that because the rule now encompasses the whole world, there is no longer a loophole that companies can use to avoid paying import taxes. The added expense will ultimately be passed on to consumers.
What about the future?
Before this change, the de minimis exemption was already scheduled to expire for all countries by 2027 as part of legislation called the “Big Beautiful Bill.” It even included penalties for not following the regulations.
Trump’s executive order sped things up. Now, the total removal of duty-free small shipments has come, and it is for everyone.
What can consumers expect?
If you order regularly from Shein, Temu, or other foreign online stores, prices will soon go up. Delivery might also be postponed or made more complex under the new rules and customs checks.
You might want to shop more carefully by comparing prices or ordering from retailers that deliver domestically in the U.S. to avoid surprise fees.
Summary
- The de minimis exemption permitted small packages worth less than $800 to enter U.S. import tax-free.
- President Trump ended this exemption for all countries, closing a loophole used by companies like Shein and Temu.
- That means import taxes on the majority of packages from overseas will be levied starting August 29.
- Companies will have higher costs and may pass them on to consumers, which will make online shopping more expensive.
- Poorer Americans will be the most affected.
- Sellers are adjusting their shipping policies but cannot avoid the new taxes completely.
This new law marks a major shift in how Americans shop online. It could make your favorite foreign deals less affordable and more troublesome. Keeping an eye on prices and shipping policies will make you a wiser consumer under the new regime.
