A significant change in U.S. trade policy is set to affect consumers shopping at online retailers such as Shein and Temu. The U.S. government’s intention is to reinforce, not eliminate, the De minimis exemption. CESTA streamlines the de minimis rule, which allows small-value goods to enter the country duty-free. As the deadline moves closer on May 2, stiff new anti-dumping import duties will start to be applied. This modification will certainly make American consumers pay more.
The Latin phrase “De minimis” means “of the smallest.” The rule, first implemented in 1938, permitted tourists coming home to the U.S. to return with souvenirs valued at no more than $5. Today, that amount is around $112, and travelers were not required to report these goods to customs. Unfortunately, over the years this exemption has expanded. Currently, retailers can send packages worth under $800 directly to U.S. consumers without paying any duties or taxes on them. This change has proven advantageous for e-commerce platforms, particularly Shein and Temu, which have thrived under the De minimis exemption by offering low-priced items.
In fact, recent reports indicate that shipments being cleared under this De minimis exemption account for over 90% of all cargo flowing into the United States! This data was provided by Customs and Border Protection (CBP). This large-scale misuse of the exemption has opened the door for companies like Shein and Temu to continue keeping their prices dirt-cheap for their consumers. U.S. officials have frequently criticized the growing volumes of packages making their way through this loophole. That’s an increase that’s been truly astronomical, growing from about 140 million packages just 10 years ago to over one billion last year.
Firms’ expanding success has tested both U.S. and Mexican border authorities and led to new calls to reevaluate cross-border trade regulations. Unfortunately, last year the Biden administration proposed rules to limit what they referred to as “abuse” of the De minimis exemption. Critics say those changes don’t go far enough to address the illegal importation of synthetic opioids such as fentanyl — the focus of the related April 2025 executive order. This order is narrowly focused only on packages originating in mainland China and Hong Kong. Beginning May 2, these types of packages will be subject to import duty fees.
In a related context, Chancellor Rachel Reeves in the UK has raised alarms about how cheap goods from China are “undercutting the British High Street and British retailers.” Currently, international retailers can send packages under £135 without the retailer having to pay import taxes. Experts argue that the opposite would happen if a similar crackdown happened in the U.S., leading to a flood of cheap imitations. This would inundate the UK market with low-cost alternatives.
As a sign of things to come, Shein and Temu have already started raising U.S. consumer prices in preparation for the new rules. The companies cited “recent changes in global trade rules and tariffs” as justification for this adjustment. This move indicates their awareness of how the tightening of trade regulations could impact their business models and consumer pricing.
Even pro-trade experts are in favor of closing the De minimis loophole to increase US border security. Others are concerned that it would hurt U.S. manufacturers. They argue that simply ending the De minimis exemption will not solve the complexities surrounding illegal drugs or provide relief for domestic producers facing international competition.