So far, former President Donald Trump has signed one executive order to accomplish this. This order closes the de minimis trade loophole that briefly permitted low-value packages valued at $800 or less to come into the United States duty-free. This major change takes effect August 29. It is designed to address the specific fears that U.S. businesses have reported in response to unfair competition from foreign retailers.
To this day, the de minimis trade loophole has faced criticism for its effect on domestic industries. The Trump administration has derisively labeled it a “big scam.” They claim that it undermines America’s entrepreneurs by enabling ultra-low cost e-commerce competitors such as Temu and Shein to import products from China without paying any import tariffs. De minimis shipments have ballooned to an incredible 309 million units this FY. That’s an incredible increase over the 115 million units sold for all of last year combined.
In May, Trump had already narrowed the de minimis exemption only for goods coming from China and Hong Kong. This latest executive order, arguably extending that ban to all countries, has sparked backlash from various industries. An auto parts retailer who did business with Walmart challenged the de minimis ban as arbitrary and capricious. They protested that this change could completely jeopardize their business models.
Trump’s de minimis ban was recently given the green light by a federal trade court. Through this order, the D.C. The White House pointed out that the growing number of de minimis shipments is a real concern to many U.S. businesses. They caution that this loophole gives foreign companies an unfair edge over American firms.
The closure of the de minimis loophole will now subject all low-value imported goods to duties, which could alter the purchasing habits of American consumers and impact the operations of online retailers that have thrived under the previous exemption. In anticipation for the upcoming changes, Temu has already stopped shipping products directly from China.
With the effective date just around the corner, people and businesses are preparing to deal with the outcomes of this policy change. We’re excited to see how the market responds to the new standards. Over the next year it will be telling to see if other major retailers follow suit and make these changes to their shipping strategies.