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The United States on Friday formally scrapped a long-standing tariff exemption for Chinese goods worth less than $800, striking a blow to budget-friendly online retailers like Shein and Temu that have built their empires on shipping inexpensive items directly to American consumers.
The policy shift, previously announced by the White House, came into effect at the end of the week. Authorities framed it as part of a broader effort to stem the flow of illicit synthetic opioids into the country, claiming the duty-free loophole had been exploited.
From now on, low-value commercial shipments from China will face hefty tariffs of 145 percent — a level consistent with existing levies on Chinese goods. Deliveries through the US Postal Service will incur duties amounting to 120 percent of their declared value, or a flat $100 fee, which is set to double to $200 next month.
The end of the “de minimis” exemption, which previously allowed goods under $800 to enter the US without tariffs, could dramatically reshape the economics of Chinese e-commerce exports. Gregory Daco, chief economist at EY, warned in a client note that the new rules would compress already slim profit margins and raise prices for consumers.
The development is the latest escalation in a trade conflict between Washington and Beijing, with both sides exchanging rounds of tariffs. The US recently imposed 25 percent duties on key Chinese sectors such as automobiles, steel, and aluminum. In retaliation, China slapped sweeping 125 percent tariffs on American imports.
While most US trade partners face a baseline 10 percent import duty, Mexico and Canada are subjected to a higher 25 percent rate for items not covered by existing North American trade agreements.
The crackdown poses a particular threat to the business models of fast-fashion and discount retailers reliant on direct-to-consumer shipments from China. However, shares of some Chinese e-commerce giants listed in New York rose on Friday, reflecting market hopes of a negotiated solution and the fact that investors had already factored in the changes.
PDD Holdings, parent company of Temu, saw its stock climb 3.7 percent by mid-afternoon trading, while Alibaba gained roughly 4 percent.
According to the Financial Times, Shein has now delayed its long-rumoured plans for a public listing in London, citing the potential business impact of the new tariff regime.
US President Donald Trump had also considered eliminating the exemption earlier this year, only to reverse course after encountering logistical challenges. At the time, China condemned the proposal, accusing Washington of politicising trade and weaponising economic policy.
