The United States Postal Service has announced temporary suspension of parcels from China and Hong Kong after President Donald Trump closed a trade loophole this week that allowed companies such as Temu and Shein to ship low-value products duty-free to the US.
The Trump administration put an additional 10% duty on Chinese goods, which went into effect on Tuesday, and moved to remove the “de minimis” loophole, which lets importers and US consumers to avoid paying tariffs on packages valued at less than $800.
According to USPS, the adjustment will not affect the flow of letters and ‘flats’ from China and Hong Kong.
Shein, a fast-fashion retailer, and Temu, an online dollar store that sells everything from toys to cell phones, have expanded rapidly in the United States, 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.
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.
Temu, a subsidiary of Chinese e-commerce giant PDD Holdings, and Singapore-based Shein, which plans to list in London this year, have taken steps to mitigate the impact, including sourcing more products from outside China, opening U.S. warehouses, and bringing more U.S. sellers on board.
However, the vast bulk of their items are still manufactured in China.
Trump put the additional tariffs on Chinese goods after repeatedly telling Beijing that it was not doing enough to stop the flow of fentanyl, a lethal synthetic drug, into the United States.
