The Trump administration’s move to shut down a long-standing tariff loophole is already hammering Chinese exporters and disrupting e-commerce giants that hooked Americans on cheap goods, according to Bloomberg News.
New customs data show that the value of small packages shipped from China to the U.S. cratered to just over $1 billion in May, marking a 40% year-over-year drop and the lowest since early 2023, Bloomberg reported Friday. The decline coincides with President Donald Trump’s April decision to end the so-called “de minimis” loophole, which allowed packages valued under $800 to enter the U.S. duty-free.
The policy change was unveiled as part of Trump’s “Liberation Day” tariff announcement, aimed at countering foreign trade practices that he argued undermine the domestic economy.
“While the U.S. previously offered a generous de minimis exemption, China enforces strict import restrictions and tightly limits de minimis exemptions, showing no similar leniency toward U.S. shipments,” the Trump administration said at the time.
Chinese e-commerce platforms like Temu built their business models around the rule, shipping low-cost clothing, electronics and household goods directly to American consumers in small, duty-free packages. Since Trump closed the exemption, those parcels are now subject to duties as high as 54%, throwing a wrench into the fast-fashion business and roiling thousands of Chinese merchants, according to Bloomberg.
Temu has been hit especially hard, as the Chinese retailer’s weekly U.S. sales dropped more than 25% from mid-May to early June, Bloomberg reported. However, smaller sellers are also feeling the pain.
“Without the exemption, it would mean tougher business to us, and much fewer options for consumers, and potentially higher prices,” one Chinese business owner told Bloomberg. “This is a lose-lose situation.”
Supporters of the crackdown, however, argue that the de minimis loophole gave Chinese companies an unfair advantage over American small businesses and allowed them to flood the U.S. with cheap goods, often produced under questionable labor conditions.
“We were on a very bad trajectory prior to this administration taking over because the de minimis loophole alone was decimating our industry,” Larry Severini, who owns a plant that produces the embroidery for American flags, told the Daily Caller News Foundation. “With [Trump’s] executive action, quickly realizing that has to stop — primarily with China — we’ve already seen improvement in online sales.”
The Trump administration also framed the closure of the de minimis loophole — which allowed many packages to enter the country without formal customs entries — as a way to combat the flow of opioids, which killed over 76,000 Americans in 2023.
“President Trump is targeting deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption,” the administration said in a press release at the time.
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