Trump Ends Loophole Keeping Temu and Shein Cheap
President Donald Trump’s latest executive order could shake up the way Americans shop online. While his sweeping tariff threats have been unpredictable, a 10% tax on Chinese goods is set to take effect on Tuesday, alongside a little-known but crucial provision: the closure of the de minimis loophole.
What Is the De Minimis Loophole?
The de minimis rule allows packages valued under $800 to enter the U.S. duty-free, meaning consumers can receive up to $800 worth of goods per day without paying import taxes. This loophole has been a game-changer for e-commerce giants like Shein and Temu, which rely on direct-to-consumer shipping from Chinese warehouses, avoiding the costs of U.S. distribution centers.
Originally implemented nearly a century ago, the de minimis threshold was raised from $200 to $800 in 2016 after lobbying from platforms like eBay, Etsy, and major shipping companies. But with the explosion of online shopping, de minimis shipments jumped from 139 million in 2015 to 1.36 billion in 2024, according to U.S. Customs and Border Protection (CBP).
How Trump’s Executive Order Changes the Game
By closing the de minimis loophole, Trump’s order would subject low-value shipments to standard tariffs—plus his new 10% tax on Chinese goods. For platforms like Shein and Temu, which offer ultra-low prices by avoiding these fees, this could be an existential threat.
A cheap $5 T-shirt from China could now face:
- Trump’s new 10% tax
- Existing tariffs based on product category
- Additional China-specific tariffs from Trump’s first administration
This could make prices less competitive, undercutting the business model that helped Shein and Temu challenge Amazon’s dominance in budget e-commerce.
The Bigger Impact: More Expensive Goods for U.S. Shoppers
Temu and Shein aren’t the only ones affected. Small businesses, dropshippers, Etsy and eBay sellers, and even Amazon could feel the squeeze. Amazon itself recently launched "Haul", a budget shopping marketplace mimicking Temu’s direct-from-China model.
If de minimis is eliminated, prices for low-cost clothing, accessories, and home goods will likely rise, disproportionately affecting lower-income shoppers who rely on these platforms for affordable goods.
The Justification: Drug Trade or Trade War?
Trump has framed the move as a way to curb drug trafficking, arguing that de minimis packages receive less scrutiny and could be used to transport synthetic opioid ingredients. However, critics argue that small parcels aren’t necessarily riskier than large shipments and that enforcement costs would balloon into the billions.
The Future of Cheap Online Shopping
Both Democrats and Republicans have signaled interest in closing de minimis, meaning this shift may outlast Trump’s presidency. If it goes into effect Tuesday, expect price hikes, slower shipping times, and a reshuffling of global supply chains—all of which could change how Americans shop online.
