U.S. Ends Duty-Free Imports Under $800: E-Commerce Giants Like Amazon and Shein Face New Tariffs

On May 2, 2025, the U.S. ended the 'de minimis' exemption, which allowed duty-free imports under $800, through an executive order by President Donald Trump. This change affects e-commerce platforms like Amazon, Temu, and Shein, as over half of these shipments originate from China. The new policy introduces tariffs up to 145% and additional customs procedures, impacting global e-commerce. The decision aims to address trade and security concerns, including the flow of fentanyl precursors, and to protect U.S. businesses from unfair competition.

The End of a Trade Loophole

The de minimis exemption, rooted in Section 321 of the Tariff Act of 1930, was originally designed to reduce the administrative burden of collecting duties on low-value imports. Over the decades, the threshold was gradually raised—from $1 in 1938 to $800 in 2015—culminating in a surge of cross-border e-commerce shipments, particularly from China. In 2023 alone, 62% of all de minimis shipments, valued at approximately $33.8 billion, came from China.

The Trump administration’s decision to eliminate the exemption for Chinese and Hong Kong-origin goods was driven by a combination of trade, security, and political concerns. Trump cited the need to curb the flow of fentanyl precursors and to protect U.S. small businesses from what he called “a big scam going on against our country.” The executive order, signed in April, mandates that all imports from China and Hong Kong—regardless of value—are now subject to full customs duties and inspections.

New Tariff Regime and Customs Procedures

Under the new rules, packages that would have previously qualified for duty-free entry are now subject to tariffs as high as 145%, or flat fees of $100 per package, increasing to $200 on June 1. In some cases, a 30% duty or a $25 per item fee (rising to $50 in June) is being applied, depending on the product category and shipping method.

This change has created a significant administrative burden for U.S. Customs and Border Protection (CBP), which must now inspect millions of additional packages daily. Trade experts warn that the increased volume of inspections could lead to substantial delays in shipping and delivery times, particularly for goods arriving through the international postal network.

E-Commerce Platforms Respond

Chinese e-commerce platforms Temu and Shein, which together account for over 30% of all de minimis shipments to the U.S., have been among the hardest hit. Both companies issued notices in mid-April warning customers of upcoming “price adjustments” due to the new tariffs. Shein reportedly raised prices by about 10% in a two-day span, while Temu added import charges of up to 145% and announced it would cease direct shipments from China to U.S. consumers altogether.

Temu has also begun shifting its logistics strategy, focusing on domestic U.S. warehouses and expanding operations in other markets such as Europe, Japan, and Latin America. Shein, similarly, is exploring alternative supply chain routes and pricing models to maintain competitiveness.

Amazon, while not as reliant on direct shipments from China, is also affected. Many third-party sellers on the platform source goods from Chinese manufacturers and have used the de minimis exemption to offer low-cost items with fast shipping. These sellers now face higher import costs and potential delays, which could impact pricing and availability for U.S. consumers.

Trade Data and Market Shifts

The volume of de minimis shipments has exploded in recent years, rising from 134 million in 2015 to nearly 1.4 billion in 2024. Much of this growth has been fueled by the rise of direct-to-consumer e-commerce and dropshipping models, which allow sellers to bypass traditional retail channels and ship goods directly from overseas manufacturers to American buyers.

From 2018 to 2023, the value of low-value e-commerce exports from China surged from $5.3 billion to $66 billion, according to the Congressional Research Service. The de minimis exemption was the primary vehicle for this trade, enabling Chinese sellers to undercut U.S.-based competitors on price.

With the exemption now closed, many small- and medium-sized businesses that relied on Chinese suppliers are facing uncertainty. Sellers on platforms like Etsy and Shopify report rising costs and declining U.S. orders, prompting some to consider exiting the market or shifting focus to other regions.

Policy Background and Implementation

The Trump administration initially attempted to close the de minimis loophole in February 2025, but implementation was delayed after packages began piling up at customs facilities. On April 2, Trump announced that the necessary protocols were in place to begin collecting revenue on small-value packages, setting the May 2 enforcement date.

The policy applies to all goods made in mainland China and Hong Kong, whether shipped directly or indirectly to the U.S. This includes items routed through third countries or processed through intermediary logistics hubs. The White House has stated that the new rules are part of a broader effort to level the playing field for American manufacturers and retailers.

Industry and Consumer Reactions

Industry groups and trade experts have expressed concern over the suddenness and scope of the policy change. Logistics providers describe the situation as “total chaos,” with many scrambling to adjust systems and staffing to handle the increased volume of customs declarations and inspections.

Consumers, meanwhile, are already feeling the effects. Prices on popular platforms have risen, and shipping times have lengthened. Bargain-hunters who once relied on ultra-cheap goods from Temu and Shein are now facing higher costs and fewer options.

While some companies are exploring mitigation strategies—such as relocating supply chains or absorbing part of the tariff costs—many acknowledge that the era of duty-free, low-cost imports from China is over.

References

• Key loophole impacting Shein, Temu closes this week. But customers are already affected.
• Why prices on some of Americans’ go-to shopping sites are suddenly spiking
• A de minimis tariff exemption expires Friday. Here's what that means for shoppers.
• De Minimis Gone: New Import Rules Hit E-commerce
• As Trump enforces new tariffs, some retailers will no longer ship to the U.S.
• Smaller Online Vendors Dread Trump's Closing of a Tariff-Free Loophole
• Is this the end of fashion’s international shipping?
• Commentary: Chinese e-commerce giants were prepared for tariffs, but not like this
• The Daily Money: Heard of de minimis? Why care?