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In May this year, President Trump ended the ‘de minimis exemption’ for goods coming from China and Hong Kong, and on August 29th he expanded the rollback to all countries, calling it a “catastrophic loophole” that’s been used to evade tariffs and get “unsafe or below-market” products into the U.S.
The de minimis exemption has allowed shipments valued under $800 to enter the United States virtually duty-free and with less oversight for nearly a decade.
It has forced international businesses both large and small to rethink not just their supply chains, but their overall business models, because of the impact the change could have on their bottom lines – setting off a panic in boardrooms across the world, logistics experts said.
“The ending of that under-$800-per-person-per-day rule, from a global perspective, is about to probably cause a bit of pandemonium,” said Lynlee Brown, a partner in the global trade division at accounting firm EY. “There’s a financial implication, there’s an operational implication, and then there’s pure compliance, right? Like, these have all been informal entries. No one’s really looked at them.”
Already, the sudden change has snarled supply chains from France to Singapore and led post offices across the world to temporarily suspend shipments to the U.S. so they can ensure their systems are updated and able to comply with the new regulations.
Popularized by Chinese e-tailers Shein and Temu, use of the de minimis exemption has exploded in the last decade, ballooning from 134 million shipments in 2015 to more than 1.36 billion in 2024. Before the recent change to limit its use, U.S. Customs and Border Protection said it was processing more than 4 million de minimis shipments into the country each day.
Side Hustle and small businesses could also be impacted, as some of them rely on foreign imports of cheap products to sell online. Sellers based outside of the United States could find themselves with increased running costs for sales to US customers, or could even find that their products are no longer viable due to the increased shipping costs.
Both Amazon and Walmart have fulfillment operations in the U.S. that allow overseas businesses to ship items in bulk and store them in the companies’ warehouses before they’re dispatched to shoppers.
Shein and Temu largely avoided this model in the past in favour of the de minimis exception, but they’ve since moved to open more warehouses in the U.S. in the wake of rising tariffs.
The end of de minimis could cost U.S. consumers at least $10.9 billion, or $136 per family, according to a 2025 paper by Pablo Fajgelbaum and Amit Khandelwal for the National Bureau of Economic Research. The research found low-income and minority consumers would feel the biggest impact as they rely more on the cheaper, imported purchases.
Since the exemption ended on Chinese imports in May, the impact on Shein and Temu has been swift.
Temu was forced to change its business model in the U.S. and stop shipping products to American consumers from Chinese factories.
The end of de minimis, as well as Trump’s new tariffs on Chinese imports, also forced Temu to raise prices, rein in its aggressive online advertising push and adjust which goods were available to American shoppers.
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