The United States has officially terminated the long-standing "de minimis" tariff exemption for low-value imports from China and Hong Kong, marking a significant shift in its trade policy. This exemption, which previously allowed packages valued under \$800 to enter the U.S. without incurring duties or detailed customs checks, played a key role in fueling the success of Chinese e-commerce giants such as Shein and Temu in the American market. Its removal is set to have wide-reaching consequences for global trade, consumers, and supply chains.

Effective May 2, 2025, the new policy introduces a 54 percent tariff or a flat fee of \$100 per package—whichever is greater—on all small shipments from China and Hong Kong. This fee is scheduled to increase further to \$200 in June. The new charges are in addition to the existing 145 percent tariff on all Chinese imports, intensifying the already strained trade relations between the two economic superpowers.

The de minimis rule, regarded as one of the most generous globally, enabled over 1.3 billion packages in 2024 to enter the U.S. duty-free, with roughly 60 percent of them originating from China. With its removal, each package must now undergo customs processing, adding new layers of bureaucracy, shipping delays, and operational costs.

E-commerce platforms Shein and Temu, which have heavily relied on this exemption to deliver low-cost products directly to U.S. consumers, have already begun raising prices. Some product categories, especially health and beauty items, have seen price hikes of over 50 percent. These changes are likely to impact millions of American consumers who were drawn to the platforms for their affordability.

The end of the de minimis exemption is expected to place further pressure on the Chinese economy. Analysts suggest it could reduce China’s export growth by 1.3 percentage points and GDP growth by 0.2 points. The apparel and consumer electronics sectors are expected to be the hardest hit.

In response, companies are looking for alternative strategies. Shein is reportedly setting up a large-scale warehouse in Vietnam to hedge against rising U.S. tariffs and to diversify its supply chain. Businesses are also exploring methods such as bulk importing and using U.S. distribution centers to soften the impact of the new trade environment.

The policy change could also influence global trade dynamics, as other nations, including the European Union, Thailand, Vietnam, and Singapore, are now reconsidering their own de minimis thresholds. Meanwhile, U.S. Customs and Border Protection may face logistical challenges in processing a growing number of packages requiring inspection, potentially slowing down the flow of goods and affecting smaller businesses.

While the move is intended to protect U.S. manufacturers by leveling the playing field, it brings with it increased prices, slower delivery times, and a more complicated logistics framework. As trade tensions between the U.S. and China deepen, the long-term implications of this policy shift remain uncertain, but it is clear that the e-commerce trade model that relied on fast, low-cost cross-border shipping is undergoing a significant transformation.