Shein, Temu face an even steeper tariff as key loophole is set to close next month
As a trade war escalates between China and the U.S., the impact on low-value, e-commerce packages is coming into view.
Shoppers at online stores like Shein and Temu could see higher prices and slower shipping times when a trade loophole known as "de minimis" closes, which is set to happen in May.
The de minimis exception has allowed for packages valued under $800 to come in to the U.S. duty-free.
President Donald Trump originally closed the loophole in February, but then postponed the closure after packages began piling up without time to plan and execute the policy change, according to Reuters.
April 2, or what Trump billed as "Liberation Day," brought a plan to end the loophole, and the subsequent escalating tariff rates with China have further raised the duties these packages will face.
May 2: Packages previously covered by de minimis set to face taxes
After China imposed its own retaliatory tariffs on the U.S., Trump announced the tariff on Chinese imports would jump from 54% to 104% in total, before again raising it to 145% on Wednesday.
Early Friday morning, China announced it would raise its own duties on US goods to 125%.
As of Friday morning, here is the latest announcement from the White House on the tax plan for packages from China that would be covered under de minimis:
Starting at 12:01 a.m. on May 2, carriers will either have to pay a 120% rate on the package or a $100 package fee. On June 1, that fee will jump from $100 to $200.
What is de minimis and why will it impact Shein and Temu?
Shein and Temu sell a range of products, including clothing, furniture and more that arrive quickly and cheaply.
Between 2018 and 2023, Chinese exports in these low-value, single packages jumped from $5.3 billion to $66 billion, according to a February congressional report.
Section 321 of the Tariff Act of 1930, which allows for de minimis, has been the primary pathway for e-commerce imports from China to arrive in the U.S., according to the report.
Over half of all packages with de minimis exemptions come from China, and more than 30% of all daily packages shipped under de minimis are from Temu and Shein, Reuters reported in February.
Eliminating the loophole for China would have "far-reaching negative effects for Americans, particularly poorer consumers," according to libertarian think tank the Cato Institute, which also argued the policy change will lead to administrative bottlenecking.
Contributing: Mary Walrath-Holdridge
Kinsey Crowley is a trending news reporter at Paste BN. Reach her at kcrowley@gannett.com. Follow her on X and TikTok @kinseycrowley or Bluesky at @kinseycrowley.bsky.social.