President Donald Trump signed an order on Tuesday to raise duties on packages valued under $800 from China to 90% of their value, or a flat fee of $75 per item, effective May 2. The flat fee will increase to $150 after June 1.
The tariff hike is expected to significantly impact Chinese e-commerce platforms Shein and Temu, which have built their business models around offering ultra-low-priced products to American consumers.
The action closes the “de minimis” loophole that previously allowed Chinese imports valued under $800 to enter the United States duty-free, a provision that helped e-commerce platforms like Temu, Shein, and AliExpress offer inexpensive products to American consumers.
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Supply chain experts warn the change could cause significant disruptions. Brittain Ladd, a US supply chain consultant who previously worked for Amazon and Dell, told the Financial Times that ports would be “flooded with packages” and, despite a new software system to manage duty payments, delays are likely due to the “massive” volume of packages requiring processing.
The tariff increase, part of broader trade measures that will bring cumulative tariff rates on most Chinese imports to 104%, has already prompted reactions from major retailers. Bloomberg reports that Amazon has canceled orders for multiple Chinese-made products.
Unless the US and China reach a new trade agreement, analysts expect these costs will ultimately be passed on to consumers, potentially threatening the ultra-low-price business models that have made Chinese e-commerce platforms popular in the American market.
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