Prices on platforms like Shein, Temu, and Amazon are expected to rise for American shoppers after U.S. President Donald Trump recently closed a trade loophole.
This loophole had allowed low-value packages (under $800) to be shipped from China duty-free, according to Reuters.
Shein, the fast-fashion retailer, and Temu, the online dollar-store, have both seen rapid growth in the U.S., thanks in part to the “de minimis” exemption, which allowed them to ship goods under $800 duty-free, helping them maintain low prices.
According to a June 2023 report from the U.S. congressional committee on China, Shein and Temu likely accounted for over 30% of all packages shipped to the United States daily under this de minimis provision.
Trump’s decision to halt the Section 321 de minimis exemption is part of his broader strategy to impose additional tariffs, including a 10% tariff on China and 25% tariffs on Canada and Mexico, which had been temporarily paused for a month.
This move is expected to further impact the affordability of goods from platforms like Shein and Temu.
Nearly half of all packages shipped under de minimis come from China, according to the same committee report.
“For companies like Temu and Shein this is obviously a very big deal because de minimis was one of the levers they used to be able to offer these low prices as well as ensure speed of products entering the country once they were shipped,” said Juozas Kaziukenas, CEO of e-commerce data firm Marketplace Pulse.
Temu and Shein did not immediately respond to requests for comment. However, Shein has previously stated that it supports reforms to the de minimis provision.
Amazon launched Amazon Haul in November, allowing shoppers to purchase affordable items like $5 handbags and $10 sweaters from China-based sellers, although with longer shipping times. While Trump’s crackdown on the de minimis provision is expected to impact Amazon Haul, CFRA analyst Arun Sundaram notes that it remains a new and relatively small part of Amazon’s overall e-commerce business.
Shoppers in the U.S. can find similar products to those on Amazon Haul, such as $2 pencil sharpeners and $10 pajama sets, on Amazon’s main e-commerce site, though at higher prices.
“If removal of the de minimis exemption disproportionately hurts companies like Temu and Shein, that should be a positive for Amazon,” said Sundaram.
Amazon, which is set to report its results on Thursday, did not immediately respond to a request for comment.