Washington, D.C. — President Donald Trump has enacted a closure of the loophole known as the “de minimis” exemption, which previously allowed low-value packages to enter the U.S. without incurring duties or taxes. This change is expected to affect online shoppers, particularly those purchasing from retailers like Shein and Temu, both of which have thrived on this import rule.
The de minimis threshold, which enabled shipments valued at under $800 to bypass import taxes, was implemented to simplify the customs process and facilitate e-commerce. However, both Trump and former President Joe Biden have raised concerns about its unintended consequences, claiming it has led to increased smuggling of illegal goods, including opioids.
The term de minimis, derived from Latin, refers to minor issues or quantities that otherwise might not merit attention. Introduced in 1938, the trade rule aimed to reduce the burden of collecting small duties. In recent years, however, these low-value shipments have surged, with customs authorities estimating that they accounted for more than 90% of incoming cargo to the U.S.
The closure of this loophole marks a significant shift in U.S. trade policy, with the aim of addressing illicit drug imports. According to government statements, many Chinese shipping companies have allegedly used the exemption to conceal banned substances in small packages, thereby taking advantage of the relaxed import guidelines.
Some experts argue that this move may not significantly curb the flow of illegal drugs, particularly since most synthetic opioids are trafficked across the southern border. Critics also warn that increasing border checks and regulations could burden already overwhelmed customs officials without solving underlying drug trafficking issues.
As online retailers brace for an overhaul in pricing strategies, companies like Shein and Temu have begun to raise prices in anticipation of these new costs, citing operational challenges stemming from emerging trade regulations. The American Action Forum estimates that eliminating the de minimis loophole could impose an additional financial burden of up to $30 billion annually on consumers.
In parallel, similar measures are being considered in the UK and EU, revealing a broader trend aimed at revising low-value import policies. Both regions are exploring options to eliminate duty-free thresholds, potentially leading to price increases for consumers as global retail markets adjust to tighter regulations.
The new tax structure in the U.S. now imposes a 120% tax rate or a flat fee on packages from China and Hong Kong valued at up to $800. Retailers face these challenges as they navigate shifts in consumer behavior and heightened competition in a landscape that is evolving rapidly due to political and economic pressures.
As the U.S. seeks to balance trade interests with national security concerns, the long-term implications for online shopping and e-commerce dynamics remain to be seen. The interplay of trade rules, taxation, and consumer prices is likely to shape the retail environment, prompting consumers and businesses alike to adapt to an era of increased regulation.