(NewsNation) — The Trump administration will cut the “de minimis” tariff on low-value packages from China, according to an executive order published on Monday.
The levies, reduced to 54% from 120%, will likely affect China’s e-commerce powerhouses like Shein and Temu, as well as businesses in the U.S. that rely on Chinese-made products.
The move marks the latest trade de-escalation between China and the United States. The countries reached a 90-day trade deal after talks in Geneva, Switzerland, over the weekend, soothing markets worldwide after months of uncertainty.
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What is a de minimis tariff?
The de minimis exemption previously allowed Chinese packages worth less than $800 to come into the U.S. duty-free. The rule was created because sometimes processing a tariff fee on those small packages would cost more than the package itself.
On May 2, an executive order went into effect that raised the levy on those low-value packages to 120%. Trump, who previously called the loophole a “scam,” cited the flow of fentanyl from China as the reason behind ending the tariff exemption.
Under Trump’s latest order, de minimis packages are subject to a 54% tariff, or $100 flat fee. A far cry from duty-free, the levy decrease is still likely to ease some of the nation’s shipping concerns.
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Jianlong Hu, CEO of Brands Factory, told Reuters the current tariff is still very high for international e-commerce merchants.
“Sellers are probably taking a wait-and-see approach, but in general, I think it’s fair to say the boom times of small package delivery from China to the U.S., the golden age is already gone,” Hu said.
What does de minimis mean for Shein and Temu?
Last month, China-based budget retailers Shein and Temu hiked their prices in response to Trump’s tariffs.
The price of the top 100 beauty and health products on Shein jumped 51% in the final week of April, according to data compiled by Bloomberg News.
Temu added “import charges” that sometimes cost more than the original product.
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The latest tariff change could give these retailers the time to reevaluate prices and adapt their businesses.
It’s not clear if Shein, Temu or other similar storefronts like Aliexpress will drop prices over the next 90 days — but experts predict merchants will likely take this time to restock their U.S. warehouses, even if the allure of de minimis has faded.
“I think companies that were part of the cross-border boom from China will still want to diversify their business away from the U.S. as much as they can. Everyone has already realized if you depend on the U.S., it’s too risky,” Hu said.
NewsNation’s Brooke Shafer and Andrew Dorn contributed to this report.
