The United States Postal Service (USPS) announced a temporary suspension of inbound parcels from China and Hong Kong following President Donald Trump’s closure of a trade loophole, which had allowed retailers like Temu and Shein to ship low-value packages to the U.S. without paying duties.
Additional 10% Tariff
The Trump administration imposed an additional 10% tariff on Chinese goods that came into effect on Tuesday and moved to close the “de minimis” loophole that allows importers and U.S. shoppers to avoid paying tariffs for packages worth less than $800.
USPS said the change will not impact the flow of letters and ‘flats’ from China and Hong Kong. It did not immediately comment on whether this was tied to Trump’s change to ending de minimis shipments from China and other countries.
Growth Of Temu, Shein
Fast-fashion retailer Shein and online dollar-store Temu, both of which sell products ranging from toys to smartphones, have grown rapidly in the U.S. thanks in part to the de minimis exemption.
The two firms together likely accounted for more than 30% of all packages shipped to the United States each day under the de minimis provision, the U.S. congressional committee on China said in a June 2023 report.
Nearly half of all packages shipped under de minimis come from China, according to the report.
Shein and Temu did not immediately reply to a request for comment.
“In our view, the USPS would require some time to sort out how to execute the new taxes before allowing Chinese packages to arrive in the U.S. again,” said Chelsey Tam, senior equity analyst at Morningstar. “This is a significant challenge for them because there were 4 million de minimis packages per day in 2024, and it is difficult to check all the packages – so it will take time.”
Crackdown Increases Costs
Trump’s crackdown on de minimis would make the products sold by the likes of Shein and Temu more expensive but is unlikely to dramatically impact shipment volumes, experts said.
“E-commerce volumes out of China grew 20-30% last year, so it’s going to take a sledgehammer to crack that level of consumer demand and I’m not sure de minimis alone is enough,” said Niall van de Wouw, Chief Airfreight Officer at freight platform Xeneta.
“They will still be cheaper than buying through retailers in the U.S. Delays in receiving the goods due to operational disruptions could have a bigger impact than price.”
Shein has previously said it supports reform of the de minimis provision.
Measures To Mitigate Impact
Both Temu, a subsidiary of Chinese e-commerce giant PDD Holdings and Singapore-headquartered Shein, which plans to list in London this year, have taken measures such as sourcing more products from outside China, opening U.S. warehouses and bringing more U.S. sellers on board, to mitigate the impact.
However, the vast majority of their products are still made in China.
Trump imposed the extra tariff on Chinese goods after repeatedly warning Beijing it was not doing enough to halt the flow of fentanyl, a dangerous synthetic opioid, into the U.S.
(With inputs from Reuters)
