The End of De Minimis: What Do New Tariff Rules Mean for Temu, SHEIN, and Other Chinese E-Tailers?

Under the direction of President Donald Trump and his administration, broad tariffs were enacted on China as of Feb. 4, at a rate of 10%. Notably, as Yahoo! Finance pointed out, the new tariff rules ended the de minimis loophole — one which allowed packages worth $800 or less to be shipped into the United States duty-free.

With Chinese e-tailers facing not only the imposition of the tariffs themselves but also the closing of the de minimis exemption, how might Temu, SHEIN, and others in the space react?

USPS Unclear as to How It Will Handle De Minimis Rules, Temporarily Halts Packages From China

According to a recent report from Modern Retail, the United States Postal Service (USPS) temporarily halted the handling of inbound parcels from China on Feb. 4. However, this stoppage was particularly short-lived, as regular handling of said parcels resumed on the morning of Feb. 5.

Modern Retail indicated that most of the products now seen by U.S. consumers shopping the Temu app have a green "sticker" attached advertising that the product is "local." What is meant by this terminology is that the product is likely warehoused in the United States currently, having already made the journey from overseas — not that it is a product of the United States.

The outlet was careful not to pin the swift change entirely on the ending of de minimis exemptions but also suggested that the change could be due to the Lunar New Year in China, which draws to a conclusion on Feb. 12. During this two-week span (beginning on Jan. 28), or a portion thereof, many Chinese workers will be on vacation.

While the Biden administration had previously examined tightening de minimis rules last year — estimating they would make 40% of all imports and 70% of clothing and textiles from China ineligible — the Trump administration has been much more clear-cut in its approach.

"[Trump's approach] is more across the board, saying if it’s a product of China, it’s no longer de minimis,” said Andrew McAllister, a partner with Holland & Knight, as cited by Yahoo! Finance.

“It’s much more black and white,” he added.

With De Minimis Gone, How Will Temu, SHEIN, and Others React?

One thing that most analysts seem to agree on: Temu and SHEIN are unlikely to simply exit such a lucrative market.

Prior to the announcement of Trump's executive orders surrounding tariffs, Juozas Kaziukėnas, founder of Marketplace Pulse, told Modern Retail that although changes may be on the horizon, the landscape was unlikely to shift too immensely.

“If the de minimis threshold is removed, some form of Temu will remain,” Kaziukėnas said at the time. “It will perhaps not be as cheap as it was in the past, but it’s hoping that it will still be cheap enough for people to come back to it."

Christopher Tang — a professor of global supply chain management at the University of California, Los Angeles — indicated that Temu, SHEIN, and similar Chinese operations could somewhat evade the loss of the de minimis loophole by expanding warehouse capacity on American soil, per CNN. Further, these e-tailers could make bulk shipments to the U.S. and then reship individual orders nationwide.

In both of the above scenarios, customers are likely to bear the bulk of the cost. However, as Tang pointed out, there could be a silver lining — an increase in U.S. jobs as a result.

There may be class-related concerns, as well.

A 2024 research paper from the National Bureau of Economic Research suggested that the axing of the de minimis exemption would result in a $10.9 billion to $13 billion reduction in "aggregate welfare," disproportionately hurting "lower-income and minority consumers."

"Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor," the attached abstract read.

European Union Also Set To Clamp Down on 'Cheap E-Commerce Imports'

According to Reuters, the news doesn't get much better for SHEIN, Temu, and similar companies as the European Union seeks to cut down on "cheap e-commerce imports" headed into the EU.

The European Commission indicated that the two e-commerce giants would be held liable for the sale of dangerous and unsafe products from their platforms. The EU executive also revealed that SHEIN would be subjected to a formal investigation — conducted jointly with the Consumer Protection Cooperation Network of national consumer authorities — rooted in suspicions that the company was infringing upon EU consumer protection rules.

The commission exhibited alarm over the raw number of cheap imports flooding into the EU, stating that some 4.6 billion low-value items below 22 euros were imported into the EU last year. A full 91% of these originated from China, per Reuters. The commission cited unfair competition with its own domestic EU sellers as well as significant environmental and climate concerns as primary motivators over an ostensible move to curtail such a volume of shipments inbound from Chinese e-tailers.

"We want to see a competitive e-commerce sector that keeps consumers safe, offers convenient products, and is respectful of the environment," EU Tech Chief Henna Virkkunnen said in a statement.

SHEIN indicated it would cooperate with EU authorities, while Temu did not immediately reply to a Reuters request for comment.