The United States Postal Service (USPS) has announced a temporary suspension of parcels from China and Hong Kong following President Donald Trump’s imposition of an additional 10% tariff on Chinese goods effective Tuesday.
This loophole has been utilized by retailers such as Temu and Shein to ship low-value packages to the U.S. without incurring duties.
The Trump administration has implemented an additional 10% tariff on Chinese goods effective Tuesday and has moved to eliminate the “de minimis” loophole, which permits importers and U.S. consumers to avoid paying tariffs on packages valued under $800.
USPS clarified that this change would not affect the flow of letters and ‘flats’ from China and Hong Kong. However, they did not confirm if this suspension is directly related to the administration’s move to end de minimis shipments from China and other nations.
Affected retailers
Retailers like fast-fashion giant Shein and online dollar-store Temu, which sell a wide array of products from toys to smartphones, have experienced significant growth in the U.S., partly due to the de minimis exemption.
- According to a June 2023 report by the U.S. congressional committee on China, these two companies likely account for over 30% of all daily packages shipped to the U.S. under the de minimis provision. The report also highlights that nearly half of all de minimis packages originate from China.
- Neither Shein nor Temu responded promptly to requests for comment.
Chelsey Tam, Senior Equity Analyst at Morningstar, remarked, “In our view, the USPS will require some time to determine how to implement the new tariffs before Chinese packages can resume arriving in the U.S. This presents a significant challenge given the 4 million de minimis packages per day in 2024, making it difficult to inspect all packages promptly.”
What you should know
- Experts suggest that Trump’s tightening of the de minimis rule will make products from Shein and Temu more expensive, but it is unlikely to significantly affect shipment volumes. Niall van de Wouw, Chief Airfreight Officer at Xeneta, stated, “E-commerce volumes from China increased by 20-30% last year.
- It will take significant measures to reduce consumer demand, and the de minimis rule alone may not suffice. These products will still be cheaper than those purchased from U.S. retailers. Delays due to operational disruptions could have a greater impact than price increases.”
- Shein has expressed support for reforming the de minimis provision. Both Temu, a subsidiary of Chinese e-commerce giant PDD Holdings, and Singapore-based Shein, which intends to list in London this year, have taken steps to mitigate the impact, such as sourcing more products from outside China, opening U.S. warehouses, and increasing U.S. sellers on their platforms. However, the majority of their products are still manufactured in China.
President Trump imposed the additional tariff on Chinese goods following repeated warnings to Beijing regarding its insufficient efforts to stop the flow of fentanyl, a dangerous synthetic opioid, into the U.S.
