Shein and Temu were told last weekend that they face exclusion from a U.S. trade provision that helps make their e-commerce platforms successful.
On Feb. 1, President Donald Trump imposed 25 percent
tariffs on Mexico and Canada and an additional 10 percent tariff on China. The tariffs on Mexico and Canada were paused on Feb. 3 for one month after the leaders of both countries agreed with Trump on acceptable measures to strengthen border security. But the tariffs on China are set to take effect on Feb. 4.
Included in the tariff rule is exclusion from the so-called
de minimis trade provision. Most Americans have never heard of it, but de minimis allows for the duty-free entry into the United States of any goods priced under $800.
Shein and Temu shipments of cheap goods from mainland China have benefited from that provision. Shipped directly to U.S. consumers from China, most of their goods cost under $50. Both companies were able to avoid tariffs imposed by Trump in 2018 on China-made clothing and other goods, and sell directly to American consumers tariff-free.
However, the main reason in the Feb. 4 tariffs for the temporary removal of de minimis for China, Mexico, and Canada was not the overflow of e-commerce packages but because of a small number of drug sales delivered by mail.
A White House
executive order (EO) dated Feb. 1 describes how drug paraphernalia linked to fentanyl is still being shipped into the country duty-free via de minimis.
“The flow of illicit drugs like fentanyl to the United States through both illicit distribution networks and international mail—due, in the case of the latter, to the existing administrative exemption from duty and taxes, also known as de minimis—has created a public health crisis in the United States,” the EO states.
The Customs and Border Protection (CBP) agency has been cracking down on narcotics by mail since 2021. In June 2024, CBP seized nearly six pounds of
fentanyl at the Fort Street Cargo Facility in Detroit during inspections of inbound international mail.
Despite the current focus on narcotics, Shein and Temu’s continued duty-free access to the United States remains uncertain.
China’s exploitation of the de minimis provision is seen as a problem on Capitol Hill.
The Biden administration pressured China with a Sept. 13
executive action banning all goods subject to specific tariffs from receiving the duty-free treatment. This included apparel, Shein and Temu’s core business.
On Jan. 21, 2025, CBP already
proposed to exclude de minimis shipments subject to China tariffs, such as Shein clothes. Temu’s non-apparel items that were not subject to tariffs could be exempt, however, if they agreed to a different entry process—one that
requires more details about the contents of the packages being shipped.
The growth of e-commerce platforms, including Amazon Marketplace, have led to China-based sellers gaining new, duty-free, and direct access to American consumers. The market share of American sellers on Amazon has increasingly been taken over by sellers from China, according to a
2023 report by business intelligence firm Marketplace Pulse.
As a result, de minimis has become a topic of debate in Washington. The popularity of e-commerce has led to a large increase in the number of small packages shipped into the United States from abroad.
In 2015, the United States saw about 140 million packages entering the country, availing the de minimis provision. In 2023, that number hit 1 billion for the first time, and has remained above that level since, according to
reports citing Customs officials.
Temu was the
most downloaded app on iPhones in 2024, and is projected to earn more than $50 billion in 2025, according to analysts from AB Bernstein and Tech Buzz China. Temu’s website garners
nearly 700 million visitors globally a month.
Trump’s
America First trade agenda called for an investigation into tariff revenue that the government is losing because of de minimis. Washington trade attorneys at King & Spalding say the CBP estimates
revenue losses at between $5.9 billion and $7.8 billion for 2025.
“Our trade laws have not been modernized since I started at U.S. Customs in 1993,” senior CBP official
Troy Miller said in CBP’s
Frontline Magazine in May. “And when you think about the de minimis environment—where we went from 685 million packages in 2022 to 1 billion in 2023, which translates to 4 million packages a day today—our current laws are not equipped to deal with that kind of volume.”
Shein and Temu are responsible for more than 30 percent of all U.S.-bound daily volume that falls under the provision, according to
a 2023 report by the House of Representatives Select Committee on the Chinese Communist Party.
Amazon
announced last summer that it would create a special section on its website for goods shipped not from the United States, but directly from warehouses in China in order to compete with Shein and Temu by benefiting from de minimis. That plan would be impacted if the de minimis restrictions remain for China.
