President Donald Trump’s sweeping tariff threats have been touch and go. As it stands currently, the 25 percent tax on goods from Mexico and Canada is on ice for a month, but a 10 percent tariff on Chinese goods is set to take effect on Tuesday, via an executive order of questionable legality.
Nestled within the order is a brief but important provision that could change how Americans shop online: the closing of a little-known loophole called the de minimis exception.
Under the de minimis rule, packages that are valued under $800 can enter the US duty free, and recipients in the US can get up to $800 worth of stuff per day without paying import taxes.
E-commerce giants like Temu and Shein (but also countless smaller operations) have used this loophole to ship low-value packages to shoppers, who, in turn, benefit from not having to pay import taxes on their purchases. Temu, Shein, and other companies that ship directly to consumers don’t have to store tons of merchandise in warehouses in the US: they can mail orders directly from manufacturers or warehouses in China, where many products are produced.
The de minimis provision has been on the books for nearly 100 years, but it’s arguably a bigger issue now than at any point in the past century. The number of packages avoiding taxes has skyrocketed, from 139 million a year in 2015 to over 1.36 billion in 2024, according to US Customs and Border Protection. The cost limit was increased from $200 to $800 in 2016 after groups like eBay, Etsy, and package delivery companies lobbied Congress. And the growing popularity of platforms like Shein and Temu in the last few years normalized waiting a few weeks for orders to come from China in exchange for bargain bin-priced goods.
The Biden administration previously proposed tightening the de minimis loophole. Trump’s executive order, as written, effectively kills it — making low-value shipments subject to existing tariffs plus the additional 10 percent tax. That’s not just an extra fee; it’s an existential threat to the business models of Shein and Temu. A T-shirt from China, for example, would be subject to Trump’s new 10 percent tax, plus standard tariffs that are based on the specific product and then additional China-specific tariffs that the first Trump administration put in place.
Temu and Shein’s business models keep the retailers’ prices impossibly low and has threatened Amazon’s dominance in online shopping. Last November, Amazon took a page out of Temu’s playbook and introduced Amazon Haul, a marketplace of ultracheap home goods, gadgets, and clothing that looks and feels like Chinese e-commerce platforms. As I wrote in December, Amazon is taking advantage of this same de minimis exemption: the products on Haul are even cheaper than normal Amazon listings, and the marketplace features many products that also appear for sale on Shein, Temu, and AliExpress.
If de minimis is indeed closed for packages from China, it’s likely that the impossibly cheap dresses, coats, handbags, and home decor Americans are hooked on will soon get more expensive. Tariffs are a tax on the person or entity importing the goods, not on the exporter. Research has shown that getting rid of the de minimis loophole would both cost the government billions of dollars more in enforcement and disproportionately raise costs for poorer Americans.
It’s not just big corporations that would be affected. Dropshippers who fulfill orders directly from abroad would be affected, as would small businesses importing components, parts, or supplies in batches under $800. Small orders from platforms like Etsy or eBay coming from China could cost consumers more, too.
Temu, Shein, and Amazon did not immediately respond to a request for comment.
Trump has justified imposing tariffs and ending the de minimis loophole by pointing to “the synthetic opioid supply chain,” claiming that de minimis packages receive less scrutiny and can be used for shipping drug ingredients. A Reuters investigation last year outlined how de minimis packages could be used to traffic drugs — but it’s not clear that low-value parcels pose a greater threat than larger shipments.
The prices on platforms like Shein and Temu feel unbelievably cheap because, in a way, they are. These goods depend on a technicality that both sides of the political aisle appear motivated to stamp out, and on Tuesday, they might succeed.
