A Tariff Loophole Just Closed. What That Means for Online Shopping.
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President Trump's trade war with China has made its way into your online shopping cart. Some of the most popular websites where you might find yourself paying more are Shein and Taimou.
Has anyone looked at their Shein cart this morning?
My $18 free shipping Taimou order that I tried to place last night had a $27 import charge. Import charge is $55.11. So I just watched the prices in my Shein cart triple.
These added charges are largely a reaction to the Trump administration's high tariffs on goods from China. Right now, those tariffs are hitting an average of 165 percent. But there's a second reason the price tags on these products are going up, and it has to do with something called de minimis. De minimis. De minimis. De minimis.
It's called the de minimis threshold.
The Trump administration is ending today something called the de minimis exemption. It kind of sounds like a Harry Potter spell, but it's actually a trade provision. Basically, it means companies don't have to pay taxes on goods they're bringing into the U.S. as long as those goods are worth $800 or less. But as of today, the Trump administration has taken away this tax exemption for goods from China and Hong Kong.
Now for these companies, the elimination of De Minimis is basically a double whammy. They didn't have to pay taxes when they sell to U.S. consumers. Now they have to, and the amount of tax is exorbitant.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, May 2nd. Coming up on the show, what a world without De Minimis means for e-commerce. Did you realize that you were going to have to be an expert on De Minimis?
Yeah, no.
That's our colleague Shen Liu. Lately, she's been covering the administration's efforts to roll back the de minimis exemption. De minimis, by the way, is a Latin phrase, and it refers to things that are small or trifles. What is the purpose of the exemption originally? Like, who was supposed to benefit from it?
The purpose originally was to allow Americans to bring back souvenirs from overseas trips without having to pay tariffs on them.
De Minimis was designed to make things simpler so that customs wouldn't have to inspect and tax every small item that American travelers brought back. For a long time, de minimis applied to goods under $200. Then, in 2016, Congress raised the limit to $800. And that new limit caught the attention of businesses because it gave them a way to avoid paying taxes on low-cost imports.
And the use of de minimis exemption has ballooned over the years. About 1.4 billion shipments using the de minimis provision entered the U.S. in 2024. That was up from 637 million four years earlier.
The exemption's popularity attracted government scrutiny. Since 2022, Congress has tried to get rid of the de minimis exemption. But those efforts didn't get far. When Trump announced new tariffs on goods from Mexico, Canada, and China back in February, he also said he would take away the de minimis exemption for all three countries. He called de minimis a loophole that gave other countries an advantage over the U.S. and allowed illegal drugs to be smuggled in. They're sending massive amounts of fentanyl, killing hundreds of thousands of people a year with the fentanyl.
So the stated rationale is to stem the illegal flow of synthetic opioids, which is fentanyl, into the U.S. And Trump has declared that as a national emergency. Mexico is the main source of the drug, but Trump also blamed Beijing for not doing enough to stop the chemical ingredients from flowing out of China.
China denies that it's at fault for the widespread use of fentanyl. It says that the failure is with the U.S., which China says hasn't been able to curb domestic addiction. Trump's order to suspend de minimis in February led to a lot of confusion. In the days that followed, something like a million packages piled up at JFK Airport in New York. A week later, Trump delayed the suspension to May 2nd, but limited it to goods from Hong Kong and China only. Already, companies are feeling the pain, especially those that have built business models around the de minimis exemption.
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