A loophole that has allowed American shoppers to buy lots of cheap goods from mainland China and Hong Kong without paying tariffs and filling customs forms is closing on Friday.
Prices have already gone up.
Orders for many imported goods from retailers like Shein and Temu could dwindle as consumers balk at the higher prices and new inconveniences. But, like much of President Trump’s trade war, the administration’s policy on the loophole has gone through changes. The president had ordered that the loophole be closed in February, but then reinstated it within a few days. Logistics experts said the short closure caused a pileup of packages at the borders.
What exactly is going away?
Since 2016, items worth $800 or less could be imported into the United States without the recipient’s paying tariffs or even filing the paperwork typically associated with purchases of foreign goods. The loophole is known as the de minimis exemption. Mr. Trump is eliminating the exemption only for goods from mainland China, the largest source of de minimis shipments, and Hong Kong.
A report for Congress this year said Customs and Border Protection processed over one billion de minimis packages a year. The average value of the shipments in 2023 was $54.
Shipments worth under $800 have been exempt because Congress believed the expense and inconvenience of processing them would not justify the customs revenue. Mr. Trump is ending the exemption, in part, to try to prevent the flow of fentanyl and fentanyl’s precursor substances into the United States via de minimis shipments.
De minimis shipments ballooned after Mr. Trump imposed tariffs on China during his first administration, suggesting that people and businesses were turning to smaller packages to avoid tariffs.
Mr. Trump on Wednesday called the de minimis provision a “scam” that came at the expense of small businesses in the United States. Traditional retailers that typically send big bulk shipments to their warehouses — and pay tariffs on those shipments — have also long expressed frustration with the workaround, arguing that it put American companies at a disadvantage.
How is this hitting shoppers?
Since tariffs on Chinese goods are punishingly high, de minimis goods are already starting to cost a lot more.
That’s evident to shoppers on the Chinese e-commerce site Temu. The company recently began detailing the cost that tariffs would add to their purchases.
For example, a cart of 10 items from Temu, including a 50 pack of heavy-duty hangers for $70.50, a men’s green linen shirt for $19.38 and a fluffy pink dog bed for $24.05, came out to $275.03, including international freight charges, and $10.20 in sales tax. But at checkout, the website tacked on $343.26 in import charges, bringing the total to $628.49. (Temu does give shoppers the option of buying goods marked as coming from local warehouses that do not incur import charges.)
At Temu’s rival Shein, a cart of 10 similar items came out to $244.03. Though it didn’t detail additional import charges on the goods, Shein’s website told shoppers: “Tariffs are included in the price you pay. You will never have to pay extra at delivery.”
Still, shoppers said they’d seen prices for some items on Shein’s website rise over the weekend. Even though the tariff exemption isn’t expected to end until Friday, the charges are appearing already because orders placed now won’t cross the border until after.
Lindsay Olive of Atlanta, who shops regularly on Shein, put a number of summer dresses in her cart last week, including a blue one for $10.88 and a floral one for $11.29. When she went to check out this weekend, the price for the blue dress had increased to $13.88 and the floral had jumped to $15.43, according to screen shots she shared.
“I knew things were going to start going up in price, and I wanted to get some summer dresses before that happened,” Ms. Olive, 39, said. She expects prices will climb further.
Amazon said on Tuesday that it had considered detailing import charges on the part of its site — called Amazon Haul — that competes with Temu, but decided not to.
“Teams discuss ideas all the time,” the spokesman, Ty Rogers, said in a statement. He said it was never under consideration for the main Amazon site, adding: “This was never approved and is not going to happen.”
The import charges can differ depending on how the goods are shipped. If they come on an express carrier like DHL or FedEx, the goods will be subject to tariffs as high as 145 percent, or $14.50 on a $10 T-shirt.
Shipments coming in through the Postal Service will face a tariff equivalent to 120 percent of the value of the goods, starting Friday, or a fee of $100 per package. The fee increases to $200 in June.
What about the paperwork?
One of the conveniences of a de minimis shipment is that the recipient does not have to provide a Social Security number to get the goods, as is the case with other types of imports.
Instead, de minimis goods require only a name and an address.
As of Friday, de minimis shipments from China will be classified as “informal entry” imports. Informal entry goods, which can be worth up to $2,500, do not require a recipient’s Social Security number, Customs and Border Protection said in a statement. Still, the agency said in January that carriers often require Social Security numbers because having them speeds up clearance through customs.
FedEx said that, in accordance with Customs and Border Protection requirements, it would not require Social Security numbers on shipments from China that lose their de minimis exemption on Friday. DHL said it would not require Social Security numbers on informal entry shipments. UPS declined to say whether it would require Social Security numbers, but the company added that it had the expertise to help its customers “navigate global trade and follows all applicable laws and regulations.”
A representative for the Postal Service said it would “not have a role in duty collection for items of de minimis value postal shipments.” Instead, the tariffs would have to be collected by the carrier bringing the goods into the United States.
Will there be delays?
Collecting tariffs and checking a much larger number of packages could become a challenge for carriers and Customs and Border Protection. But it is not clear whether those actions would delay packages more than a day or two or much longer.
The customs agency said in a statement that although it had “a huge task on its hand,” it was “uniquely positioned to implement and enforce the president’s tariffs.”
Ana Swanson, Danielle Kaye and Madeleine Ngo contributed reporting.
