The Trump administration recently ended the U.S. duty-free access for low-value shipments from China and Hong Kong, eliminating the “de minimis” exemptions. This change affects e-commerce firms like Shein and Temu, as well as those involved in the trafficking of illicit goods such as fentanyl. Previously, items valued at up to $800 could be sent via postal services without incurring taxes.
However, under the new rule, packages now face a 120% tax on their value or a flat fee starting at $100, increasing to $200 in June. This has led to concerns about potential chaos at airports as shippers adapt to the new regulations. The term “de minimis” refers to matters of minor importance, and in this context, it describes the U.S. waiver on standard customs procedures and tariffs for imported items below $800.
This exemption has been among the most generous globally, with the EU’s threshold set at just 150 euros ($156). The U.S. has utilized this policy since 1938 to ease administrative burdens, particularly as the waiver was increased during President Obama’s tenure, leading to a significant rise in exempted packages. In fact, shipments claiming de minimis status surged over 600% in the past decade, reaching more than 1 billion items in fiscal 2023.
The controversy surrounding de minimis arises from U.S. trade imbalances and the opioid crisis fueled by fentanyl. Reports revealed that it was alarmingly easy to import fentanyl precursors using misleading labeling. Retailers benefiting from de minimis include Shein, Temu, and AliExpress, whose growth has compelled Amazon to launch its own discount service.
Critics argue that the exemption allows companies to circumvent tariffs and inspections linked to products made with forced labor. China’s economy also faces implications from this policy shift. In the past year, China exported $240 billion in goods benefiting from de minimis, accounting for 7% of its total sales.
Analysts predict that ending the U.S. exemption could slow Chinese export growth and its GDP, particularly affecting sectors like apparel and consumer electronics.