Trump's Tariffs Target Trade Loophole Benefiting Chinese Retail Giants Temu and Shein
Lawmakers Crack Down on "De Minimis" Rule, Citing Unfair Competition and Safety Concerns
Former President Donald Trump has introduced new tariffs aimed at curbing a trade provision that has contributed to the rapid rise of budget-friendly online retailers such as Temu and Shein.
On Saturday, Trump signed executive orders imposing tariffs on three of the United States’ largest trading partners—China, Canada, and Mexico. Under the new regulations, imports from Canada and Mexico will face a 25% tariff, while goods from China will be subject to a 10% tax. Additionally, Canadian energy resources will be taxed at 10%. These tariffs are scheduled to take effect on Tuesday.
A key aspect of the orders is the suspension of the "de minimis" trade exemption, a long-standing rule allowing duty-free entry for packages valued at less than $800. Though this exemption has existed since the 1930s, its use has faced growing scrutiny in recent years. The Biden administration had already taken steps to curb what it described as "overuse and abuse" of de minimis, arguing that it allowed Chinese e-commerce platforms to undercut American competitors with cheaper prices. Critics have also raised concerns about inadequate documentation and inspections, which could pose product safety risks.
According to U.S. Customs and Border Protection, over 1.3 billion de minimis shipments entered the country in 2024, a significant jump from 139 million in 2015. The provision has particularly benefited Chinese e-commerce companies like Temu, Shein, and Alibaba's AliExpress, enabling them to flood the U.S. market with affordable apparel, household goods, and electronics—such as $15 smartwatches and $3 shoes.
Temu and Shein have aggressively expanded their U.S. presence through digital marketing, attracting millions of cost-conscious shoppers. In 2024, Temu topped Apple’s list of the most downloaded free apps in the U.S. for the second consecutive year, with Shein ranking at number 12.
While representatives from Temu, Shein, and Alibaba have not immediately commented on the new tariffs, Temu has previously denied relying on de minimis for its growth. Shein has maintained that regulatory compliance is a "top priority," with Executive Chairman Donald Tang advocating for a "complete makeover" of the de minimis rule.
The rise of these Chinese retailers has spurred competition from established e-commerce giants like Amazon, which launched its bargain-focused platform, Haul, last year. Reports suggest that Amazon has leveraged the de minimis rule to facilitate direct-to-consumer imports from China, potentially bypassing tariffs. The company has yet to issue an official statement regarding the new policies.
Major U.S. e-commerce platforms, including Amazon, eBay, and Etsy, may benefit from the Trump administration’s crackdown on de minimis. These companies provide marketplaces for third-party sellers, competing directly with Temu and Shein. Amazon, which generates a significant portion of its retail sales through third-party sellers, has historically relied on Chinese manufacturers to stock its marketplace. Marketplace Pulse data suggests that Chinese sellers now outnumber American ones on the platform.
Amid growing regulatory pressure, both Temu and Shein have been adjusting their strategies. In 2023, Temu began onboarding Chinese sellers with U.S.-based inventory to expedite shipping times, while Shein has expanded its U.S. distribution network, opening supply chain hubs domestically.
With the new tariffs in place, the landscape of online retail could shift significantly, potentially reshaping competition between Chinese e-commerce giants and their American counterparts.