In a significant policy shift, President Donald Trump is set to close the duty-free "de minimis" loophole that has allowed Chinese retailers like Shein and Temu to sell low-value goods to US consumers without incurring duties or taxes. As a result, shoppers may soon experience price increases for their favorite online purchases.
The "de minimis" exemption, which has been in place since 1938, permits the entry of packages valued under $800 without customs duties. The exemption has benefited both retailers and consumers, with over 90% of cargo entering the US currently falling under this rule, according to Customs and Border Patrol (CBP). However, both Trump and former President Joe Biden have argued the loophole has enabled the smuggling of illegal goods, particularly synthetic opioids like fentanyl.
In a recent executive order, Trump announced the closure of this loophole starting May 2. The administration noted that Chinese shippers have exploited this exemption to disguise illegal imports among low-value packages. Both Shein and Temu have indicated that they will have to adjust their pricing due to rising operational costs linked to these changes.
This policy shift is part of a broader effort to address concerns about illicit drug imports and the strain these retail platforms place on US customs resources. Over the last decade, the volume of de minimis shipments has surged from around 140 million to more than one billion, prompting increased scrutiny and strain on CBP processes.
While US shoppers are already witnessing rising prices, estimates suggest that eliminating the exemption could add between $8 billion and $30 billion in annual costs that will ultimately be passed to consumers, raising concerns about how this will impact access to affordable goods.
Internationally, similar movements are happening in other regions. The UK has announced a review of its own low-value import rules, while the European Union is calling for the removal of duty-free exemptions on parcels valued under €150. The replication of US policies in these areas could mean that consumers outside the US will also face increased costs for online shopping.
Despite the intended benefits, experts question whether the crackdown on the de minimis exemption will effectively reduce drug smuggling, as many illegal substances still cross through the southern border. Critics warn that the removal of this exemption could also overwhelm US customs agents, exacerbating existing strains on border operations during a time of heightened scrutiny on illegal imports.
