In brief
New regulations will eliminate the de minimis exemption, leading to increased costs for consumers buying from Chinese retailers.
The US government, under the directive of President Donald Trump, is set to close a duty-free loophole that has allowed online retailers like Shein and Temu to ship low-value packages without import taxes. This loophole, known as the "de minimis" exemption, has enabled parcels worth up to $800 to enter the US duty-free, accounting for over 90% of cargo imports, according to Customs and Border Patrol (CBP). While supporters said it streamlined customs, the loophole will now be closed due to concerns about illegal goods being smuggled in, particularly synthetic opioids like fentanyl. This exemption was suspended briefly in February 2023 but was met with issues from delivery firms and retailers. Starting May 2, packages from mainland China and Hong Kong will incur import duties, forcing retailers like Shein and Temu to raise prices ahead of the deadline. Estimates suggest this could result in an additional $8 billion to $30 billion in annual costs for consumers. International concern arises as similar measures are considered in the UK and EU, where low-value parcels also bypass duty fees. Experts warn that closing the exemption may not effectively combat illegal drugs and could increase the workload for already stretched US border officials.
