Temu and Shein to Increase U.S. Prices as Trump Ends Duty-Free Import Loophole for Chinese Goods

Temu and Shein will increase prices for U.S. customers due to rising operational costs following the end of the 'de minimis' exemption. This change, effective May 2, 2025, results from President Trump's order eliminating duty-free entry for goods under $800 from China, Hong Kong, and Macau. These shipments will now face a 145% tariff or a $100 fee per parcel, increasing to $200 on June 1. The policy aims to address trade imbalances and combat counterfeit goods. Both companies have notified customers of the price hikes, citing the new tariffs as the primary reason.

De Minimis Exemption Ends May 2

The de minimis rule, a U.S. customs provision dating back to 1938, has allowed individual shipments valued at $800 or less to bypass import duties and customs inspections. This exemption has been a cornerstone of the business models for direct-to-consumer platforms like Temu and Shein, enabling them to ship millions of low-cost parcels daily from China directly to American consumers.

According to U.S. Customs and Border Protection (CBP), more than 90% of all packages entering the U.S. qualify under the de minimis threshold, with approximately 60% of those originating from China. In 2024 alone, nearly 1.4 billion packages entered the U.S. under this provision.

However, beginning May 2, 2025, the exemption will no longer apply to goods from China, Hong Kong, and Macau. Instead, these shipments will face a 145% import tariff, or a flat fee of $100 per parcel—whichever is higher. This fee will increase to $200 per parcel starting June 1. The policy change is part of a broader effort by the Trump administration to address trade imbalances and combat the flow of counterfeit goods and illicit drugs through international mail.

Company Responses: Price Hikes and Customer Notices

Temu, owned by China’s PDD Holdings, and Shein, now headquartered in Singapore, have both issued nearly identical notices to their U.S. customers, warning of imminent price increases. The companies cited “recent changes in global trade rules and tariffs” as the primary reason for the adjustments.

Shein’s website stated that “price adjustments” would take effect beginning April 25, while Temu assured customers it had “stocked up” to minimize disruptions but acknowledged that higher prices were unavoidable. Both companies emphasized their commitment to keeping prices as low as possible, but acknowledged that the new tariffs would significantly raise their operating costs.

The notices come amid growing scrutiny of the platforms’ reliance on the de minimis rule. U.S. lawmakers and trade groups have long criticized the exemption for giving foreign sellers an unfair advantage over domestic retailers, who must pay duties on bulk imports. In 2022, for example, H&M paid $205 million in import duties, while Gap paid $700 million—costs that Temu and Shein largely avoided under the de minimis framework.

Trade Policy Shift and Tariff Structure

The elimination of the de minimis exemption is part of a broader set of trade measures enacted under the International Emergency Economic Powers Act. In addition to the 145% tariff on most Chinese imports, the CBP has also lowered the threshold for formal entry, requiring more documentation and customs bonds for shipments previously cleared through informal processes.

Packages that would have previously qualified for de minimis treatment will now be subject to a duty rate of up to 120% of their value or a flat fee of $100 per parcel starting May 2. This rate will rise to $200 per parcel on June 1. For some shipments, alternative duty structures may apply, such as a 30% tariff or a $25 per item fee, depending on the shipping method and declared value.

The policy shift has already prompted logistical disruptions. Hongkong Post announced it would suspend low-value shipments to the U.S. starting April 27, while DHL and other major carriers have warned of delays and compliance challenges. FedEx and UPS are also adjusting their operations to align with the new rules.

Trade Data and Market Impact

The scale of the change is significant. As many as 4 million low-value parcels arrive in the U.S. daily under the de minimis provision, the majority of which originate in China. The removal of this exemption effectively cuts off a vital channel for Chinese exporters, many of whom have turned to social media to sell directly to American consumers in a last-ditch effort to avoid the new tariffs.

Chinese manufacturers and exporters are already feeling the pressure. “The elimination of the de minimis rule threatens the survival of the Chinese e-commerce business,” said Mr. Xu, an e-commerce operator in Yiwu. “No other market offers profit margins as high as the United States.”

The U.S. government has defended the move as necessary to protect domestic industries and national security. A White House fact sheet linked the policy to efforts to combat the synthetic opioid crisis, citing concerns that the de minimis loophole had been exploited to ship illegal substances into the country.

Industry Reactions and Future Outlook

While Temu and Shein have not disclosed the exact scale of their planned price increases, the impact on their U.S. operations is expected to be substantial. Both companies have built their rapid growth on the ability to offer ultra-low prices by circumventing traditional import duties. With that advantage now removed, their cost structures will more closely resemble those of traditional retailers.

The policy change also raises questions about the future of cross-border e-commerce. As the U.S. tightens its trade rules, other countries may follow suit, further complicating global supply chains. For now, Temu and Shein are urging customers to place orders before the new tariffs take effect, but the window is closing fast.

References

• China-Founded E-Commerce Sites Say They’re Raising Prices Due To Tariffs
• DHL Freezes US-Bound High-Value Consumer Parcels Amid Customs Gridlock
• Temu, Shein prices to rise next week in response to tariffs
• Temu, Shein To Raise US Prices As Tariffs Hit Hard
• Trump closes China tariff loophole used by fast fashion retailers like Shein and Temu
• Chinese Exporters Hit Hard by Trade Turmoil
• Big surprise: Shein and Temu say they will raise prices