The U.S. de minimis exemption revisited after Donald Trump signed the bipartisan Trade Facilitation and Trade Enforcement Act (TCTEA)
The confusion is caused by the fact that President Trump used an executive order to impose a 10 percent tax on Chinese goods and close a loophole which allowed packages valued below $800 to enter the US duty free. It’s how e-commerce outfits including Shein and Temu have been able to offer goods to US buyers at such low prices. It is also widely exploited by the likes of Amazon and by merchants on Etsy and eBay.
The de minimis treatment may no longer be available in the U.S., after President Trump signed an executive order prohibiting the treatment of products made in China.
Over 1.3 billion parcels entered the US using the de minimis exemption in 2024 according to Customs and Border Protection, a number that’s grown by more than 600 percent over the past decade. The shipment from China no longer is eligible for de minimis.
When asked to comment on the U.S. shift, Teresa Murray of the Public Interest Research Group consumer watchdog told NPR that her group supports changes to the law.
De minimis is a Latin term denoting something that is “trifling or of little importance,” according to the U.S. International Trade Commission. It became law in the U.S. Tariff Act of 1930, as a way to let people skip import fees for small-value shipments.
About 100 countries have de minimis exceptions, based on a wide range of monetary thresholds. The U.S. level used to be $200, but it rose to $800 in 2016 — one of the highest in the world — when then-President Barack Obama signed the bipartisan Trade Facilitation and Trade Enforcement Act. The level is 150 euros in the European Union.
The exemption “allows imported items to be taxed free of taxes and duties”, according to the trade commission.
Implications of a bipartisan de minimis rule for the U.S. consumer, fast fashion, and toy market: a report from the Congressional Research Service
Backers of the existing de minimis structure say it eases commerce and gives consumers low prices; critics say it is used to hawk “cheap crap,” as one lawmaker put it, and gives foreign companies an unfair advantage over domestic retailers.
de minimis was being looked for change before the inauguration of Trump. The Biden administration proposed a new rule last fall to close the loophole. Politicians and agencies say the law can be prone to being abused, from unscrupulous retailers falselylabelling expensive items as costing under $800 to criminals shipping illegal drugs under the guise of innocuous goods.
The United States Postal Services has abruptly stopped accepting all packages from Hong Kong and China until further notice, according to an international service disruption notice posted on the USPS website. The move is in response to President Donald Trumps executive order to increase tariffs on China.
Together, Temu and Shein accounted for about 17% of the U.S. discount market in 2023 for items such as consumer goods, fast fashion, and toys, according to a report on de minimis policies that the Congressional Research Service (CRS) updated last week.
The Public Interest Research Group supports bipartisan legislation such as the Ensure Accountability in De Minimis Act that would limit which shipments can benefit from de minimis rules.
“Restricting what qualifies for a de minimis exemption would help keep more unsafe toys and other products from getting into our homes,” Murray said. “This would make people in the United States safer.”
She also stated that there wouldn’t be any effect on shipments of small packages directly from Temu and Shein to U.S. consumers.
Exporters also use “master cartons” (large containers holding individually wrapped boxes) and transshipments (transferring cargo to another container or vessel) to obscure products’ origins and contents, according to the CBP.
Shein and Temu: In the Closer Look at China’s “Democracy”, the USPS, and a Trucking Company
They’re among the Chinese-founded businesses that have shifted key parts of their corporate structures outside of China. The report states that Shein doesn’t sell goods in China, and that she has a Singapore parent company that is tied to a British Virgin Islands holding company.
In the near term, Shein can double down on its warehouse expansion and Temu can double down on its semi-consignment model. By shipping in bulk to the U.S. and fulfilling orders domestically, logistics cost can be reduced, Cooke said.
The USPS suspension seems like a longer term change in policy, though it’s unclear how long it’s last, because of the effort to crack down on the de minimis excemption.
Chinese Foreign Ministry spokesperson Lin Jian said China would take “necessary measures” to protect its companies, and urged the U.S. to “stop politicizing economic and trade issues and using them as a tool, and to stop unreasonably suppressing Chinese companies.”
It will likely affect online shopping destinations like Shein and Temu which are popular with younger shoppers in the U.S.
Cheap, direct postal service helps these companies keep costs low and the “de minimis” exemption that used to allow shipments to be tax free if their value was under $800 is something else.
The recent scrapping of the de minimis exemption for most products from China could erode its price advantage.
Daniel, the owner of a trucking company based in Alberta, Canada, who asked to only use his first name for privacy reasons, tells WIRED that two of his company’s trucks were turned away at the US border in New York and Montana today because they contained packages originally from China. After speaking with a customs agent in Montana, a third truck was able to enter the US by removing all packages from China.
He said that it takes a long time to identify and separate packages from China because the goods that his trucks carry include thousands of small parcels.
How Do I Get My Products? What Is Happening in the US Customs Enforcement, and How I’m Trying To Fix It?
About 10,000 people work for USAID, roughly two-thirds of whom are stationed overseas, according to the US Congressional Research Service, a nonpartisan policy research group that serves Congress (the figure excludes “institutional support” contractors). The agency has more than 60 regional and country missions that make up less than 1% of the US federal budget.
Do you work at Shein, Temu, or another ecommerce company and have insight into what’s going on? We’d like to hear from you. The reporter can reach them using a non work phone or computer.
“On a daily basis, US Customs will file and process about 100,000 entries,” says Bernie Hart, vice president of customs and trade management business development at Flexport, a US supply chain management company. Now, agents have to process a few million more packages a day, verifying what’s in them and how much they cost.
The shipments make it easier for low quality products to reach US buyers, due to the safety concerns. The e-bike and battery manufacturers have used de minims to skirt safety regulations and avoid product inspection, contributing to hundreds of fires caused by faulty e-bike batteries in New York City.