President Donald Trump’s “Liberation Day” announcements on Wednesday delivered a blow not just to key trading partners—but also to popular companies like ultra-cheap Chinese retailers Shein and Temu.
Along with a flurry of new tariffs announced by Trump, the White House said the president signed an executive order shutting down the de minimis trade loophole beginning May 2.
Under the loophole, shipments worth less than $800 can enter the U.S. duty-free, allowing foreign retailers to sell their products to Americans for cheap. Trump suspended the trade exemption in February but later delayed its cancellation after the U.S. Postal Service said it would halt all inbound packages from China and Hong Kong.
ADVERTISEMENT
Wednesday’s announcement means that goods valued at or under $800 will be subject to a duty of either 30 percent of their value or $25 per item, which will increase to $50 after June 1.
The White House claimed that shutting down the de minimis exemption was “a critical step in countering the ongoing health emergency posed by the illicit flow of synthetic opioids into the U.S.”
“President Trump is targeting deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption,” it said in a fact sheet.
“While the U.S. previously offered a generous de minimis exemption, China enforces strict import restrictions and tightly limits de minimis exemptions, showing no similar leniency toward U.S. shipments,” the White House added.
When the Trump administration briefly suspended de minimis exemption in February, the libertarian think tank Cato Institute said it was “effectively raising taxes on American consumers and dramatically increasing shipping times.”
Critics of the exemption, on the other hand, said the loophole has hurt American businesses, according to Axios.
“The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company’s ability to retain its traditional core customer base,” Forever 21 co-chief restructuring officer Stephen Coulombe said in a court filing.
