News/Commentary

Trump closes major online shopping loophole that favors foreign goods

April 3, 2025 | | Print Article

President Donald Trump’s new tariffs include a provision ending a loophole that benefited online Chinese retailers.

Online Chinese retailers like Shein, Temu, and AliExpress have for years sold foreign-made, mostly low-quality goods to Americans at exceptionally low prices and with completely free shipping.

These retailers were able to sell their products so cheaply because of the de minimis trade loophole. Under the loophole, international shipments worth less than $800 were allowed into the United States duty-free.

“The near century-old de minimis loophole helped startup marketplaces like Temu and Shein expand rapidly in the US,” according to Bloomberg. “The total volume of de minimis shipments into the US hit 1.4 billion packages in fiscal year 2024, according to the US Customs and Border Protection agency, about double the number in 2022.”

But the new tariffs announced Wednesday include a provision permanently eliminating this loophole. This means that shipments worth $800 or less will be “subject to a duty rate of either 30% of their value or $25 per item (increasing to $50 per item after June 1, 2025).”

The White House has defended the elimination of the de minimis trade loophole by arguing in a fact sheet that it’s “a critical step in countering the ongoing health emergency posed by the illicit flow of synthetic opioids into the U.S.”

“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 fact sheet continues.

The White House has also made the case that China doesn’t offer a similar loophole for American-made products.

“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 fact sheet notes.

Supporters of the elimination of the de minimis trade loophole include businesses like Forever 21, which, according to Axios, has begun “liquidating its U.S. stores after partly blaming the rise of Shein and Temu for its downfall.”

“The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company’s ability to retain its traditional core customer base,” Forever 21 co-Chief Restructuring Officer Stephen Coulombe recently said in a court filing.

Critics of this new policy, meanwhile, argue that its implementation means “effectively raising taxes on American consumers and dramatically increasing shipping times,” as the Cato Institute put it.

“If you inspect every package, it’s going to raise costs dramatically for consumers,” Clark Packard, a research fellow at the institute’s Cato Trade subsidiary, told CNN. “It’s going to slow down the reception of goods that were bought.”

Critics have also expressed doubt about the White House’s claims that ending the loophole will help stop the flow of fentanyl.

“Fentanyl and fentanyl precursors are increasingly made in labs in India, Myanmar, and other Southeast Asian countries, not just China,” the Cato Institute has claimed. “Moreover, drug trafficking networks are highly adaptable, shifting production and shipping routes in response to enforcement efforts.”

The United States isn’t alone in targeting online Chinese retailers.

“There was more potentially bad news for Temu and Shein out of Europe Wednesday,” CNN notes. “The European Union said it would control imports of low-value products from such websites more tightly as it unveiled a number of actions to tackle ‘the surge of unsafe, counterfeit and otherwise non-compliant or illicit products’ entering the bloc.”

Vivek Saxena
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